Futu not under investigation as Hong Kong SFC freezes HK$125M client assets

The Hong Kong Securities and Futures Commission has issued a restriction notice freezing assets worth up to HK$125.247 million in a client account at Futu Securities International Limited as part of an ongoing investigation into suspected IPO share manipulation.

Summary

• Hong Kong's SFC has frozen HK$125.2 million linked to a suspected IPO share manipulation scheme.
• The restriction applies to a client account at Futu, while the brokerage itself is not under investigation.
• Futu must obtain the SFC's approval before handling the restricted assets and report any related instructions.
• The investigation remains ongoing as the regulator seeks to protect investors and the public interest.

According to the Hong Kong Securities and Futures Commission (SFC), the restriction applies to assets held by a certain entity suspected of participating in a fraudulent scheme designed to create a false or misleading appearance of demand for shares in an initial public offering.

The regulator said Futu is not the subject of its investigation and stressed that the restriction notice will not affect the brokerage or any of its other clients. The action targets a specific customer account and prevents the assets from being moved while the investigation continues.

Under the notice, Futu must not dispose of, transfer, process, or otherwise deal with the assets held in the affected customer account without first obtaining written consent from the SFC. The restriction covers assets up to HK$125,247,000.

The regulator also instructed the brokerage to immediately notify it if it receives any instructions relating to the restricted assets. In addition, Futu must not assist, encourage, or cause another party to deal with those assets unless the regulator has given prior written approval.

Explaining the decision, the SFC said issuing the restriction notice is desirable in the interests of investors and the public. The investigation into the suspected scheme remains ongoing.

According to the regulator, the restriction notice was issued under Sections 204 and 205 of Hong Kong's Securities and Futures Ordinance.

While the restriction notice involves an account maintained at Futu Securities International (Hong Kong) Limited, the SFC made it clear that the brokerage itself is not under investigation.

The regulator also stated that the order will not affect the firm's day-to-day business or the accounts of its remaining customers.

Futu is licensed under Hong Kong's Securities and Futures Ordinance to conduct multiple regulated activities, including securities dealing, futures contracts dealing, leveraged foreign exchange trading, advising on securities, advising on futures contracts, providing automated trading services, and asset management.

The latest regulatory action therefore relates only to the suspected conduct of a single client entity rather than the firm's licensed operations.

Although the regulator disclosed the value of the restricted assets and the suspected nature of the scheme, it did not identify the customer entity involved or provide further details about the alleged conduct.

No enforcement action has been announced against Futu, and the SFC has not indicated when its investigation may conclude.

For now, the restriction notice remains in effect, preventing the affected assets from being handled without regulatory approval while investigators continue examining the suspected attempt to create artificial demand for IPO shares.

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