Read More
Hong Kong’s securities watchdog has cracked down on two suspected initial public offering-rigging syndicates, freezing over HK$4.6 billion in assets across 35 brokerages, after halting trading in bubble tea chain Sichuan Baicha Baidao Industrial (2555).
ADVERTISEMENT
SCROLL TO CONTINUE WITH CONTENT
In a record enforcement move, the Securities and Futures Commission issued restriction notices to six brokers prohibiting them from dealing with up to HK$4.38 billion in assets held across client accounts linked to an individual, Sun Ran, and eight related entities. The SFC said in a statement on Tuesday that the freeze is the largest of its kind in the regulator's history.
Before the market opening, the regulator directed Hong Kong Exchanges and Clearing (0388) to suspend dealings in Baicha shares over "serious concerns" that the company's listing had been manipulated to create an artificial impression of market demand.
The suspension is necessary or expedient to maintain an orderly and fair market in the shares and to protect the interests of the investing public while the investigation continues, the SFC said.
The first syndicate is suspected of running fraudulent schemes tied to the listings of both Baicha Baidao and Cloudbreak Pharma (2592), whose shares were halted by the regulator last month for the same reason.
Targeting a second suspected group, the SFC served restriction notices to 29 brokers barring them from processing up to HK$285 million in assets held in accounts under the names of Liu Haoran and two firms, in connection with the IPO of Tianju Dihe (Suzhou) Technology (2479). The stock has been suspended since April 2025 after failing to publish financial results.
According to the regulator, the syndicates allegedly entered into undisclosed agreements with listing candidates to divert portions of their IPO proceeds into financial products. Those funds were then secretly channeled back to major IPO placees or their connected parties to manufacture phantom demand during the public offerings.
"Market integrity is the bedrock of fair capital markets and true investor confidence. We maintain a zero-tolerance policy toward any form of IPO rigging, price manipulation, or the creation of a false market," SFC chief executive Julia Leung Fung-yee said in the statement.
Michael Duignan, the SFC’s executive director of enforcement, said the intervention had "significantly disrupted" two suspected syndicates and was intended to safeguard the wider public interest.
The regulator stressed that the recipient brokerages are not targets of the investigation and their remaining operations and clients are unaffected. Under the notices, brokers cannot transfer or dispose of the frozen assets without the SFC's prior written permission and must alert authorities immediately if they receive instructions related to the accounts.
The SFC added that preserved assets may ultimately be used to compensate affected investors through a restitution process. The investigation remains ongoing, and the regulator declined to comment further.
