Tracking the Investigation Turmoil of Chinese-funded Investment Banks in Hong Kong: What Happened?

On March 12, Guotai Junan International announced confirmation that on March 10, 2026, the Hong Kong Securities and Futures Commission and the Hong Kong Independent Commission Against Corruption visited its Hong Kong business premises with a search warrant and seized certain documents.

Subsequently, an employee of the institution was investigated and detained by the ICAC. Guotai Junan International stated that it attaches great importance to this matter and will closely monitor the developments.

Previously, according to Caixin reports, the Hong Kong ICAC and the securities commission had recently launched joint law enforcement and conducted surprise searches at the Hong Kong offices of two Chinese securities firms. The head of Guotai Junan Hong Kong’s Equity Capital Markets (ECM) department was taken away to assist with the investigation.

It should be noted that the ECM team is mainly responsible for IPO pricing, new share placement, refinancing, and other core equity financing businesses in the Hong Kong stock market. This is also why the market generally links this investigation incident to Hong Kong IPOs and placements.

An unnamed source told Xinfeng: The investigation of Guotai Junan's personnel in Hong Kong was triggered by suspected insider trading activities.

It is worth mentioning that in the past, insider trading in the Hong Kong stock market has often occurred in privatization projects.

A Hong Kong investment banker pointed out: "It depends on the internal organizational structure of the investment bank. In many Hong Kong subsidiaries of Chinese securities firms, privatization projects may possibly be handled or even led by the ECM team at the execution level."

Crackdown on insider trading in the Hong Kong market has a long history.

Starting from the second half of last year, several staff members of HKEX and the Hong Kong securities commission, as well as securities brokers and internet celebrities, have been investigated for insider trading activities.

In February this year, the Hong Kong securities commission disclosed a suspected insider trading case involving Chen Zhenghua, former assistant vice president of HKEX’s listing department, and others.

This tough action by Hong Kong regulators may help further stabilize the fair trading order in the Hong Kong stock market.

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