Hong Kong Regulator Orders Futu to Freeze HK$125 Million over Suspected IPO Fraud
Hong Kong’s Securities and Futures Commission (SFC) has
ordered Futu Securities International to freeze up to HK$125.25 million
(approximately US$16.1 million) in client assets linked to suspected initial
public offering fraud.
According to the regulator’s
announcement, the accounts are held by an entity suspected of participating
in a scheme intended to create a false or artificial appearance of demand for
shares offered through an IPO.
The SFC did not identify the entity, the company conducting
the offering, or whether the securities have already been listed.
The regulator stressed that Futu is not the subject of its
investigation. The restriction does not affect the broker’s operations or
accounts belonging to its other clients.
Without the SFC’s prior written consent, Futu cannot trade,
transfer, withdraw, dispose of, or otherwise process the affected assets up to
the amount specified in the notice. The broker is also prohibited from helping
another person deal with the assets.
Futu must immediately notify the regulator if it receives
instructions concerning the restricted funds or securities.
“The SFC considers that the issue of the restriction notice
is desirable in the interest of the investing public and in the public
interest,” the watchdog stated. Its investigation remains ongoing.
The order was issued under Sections 204 and 205 of Hong
Kong’s Securities and Futures Ordinance. These provisions allow the SFC to
restrict a licensed corporation’s handling of client assets while suspected
misconduct is investigated.
Futu Securities International holds licenses covering seven
categories of regulated activity in Hong Kong, including securities and futures
dealing, leveraged foreign exchange trading, automated trading services, and
asset management.
The brokerage is part of Nasdaq-listed Futu Holdings, which
operates the Futubull and Moomoo investment platforms.
Not Futu’s First Client Account Freeze
This is not the first time the Hong Kong regulator has
instructed Futu to restrict client accounts without accusing the broker of
wrongdoing.
In 2021, the SFC ordered
Futu and another local brokerage to freeze accounts linked to a suspected
social media-driven pump-and-dump operation. That investigation concerned
trading in two Hong Kong-listed companies.
The regulator also issued restrictions against Futu and two
other brokers in 2019 over client
accounts connected to suspected misconduct involving derivative warrants.
More recently, a restriction notice served on Futu on 25
June 2026 and published in the Hong Kong Government Gazette on 10 July covered
HK$7.31 million held in a single client account.
Around the same time, the SFC published separate notices
involving accounts at Webull Securities, Tiger Brokers, Longbridge, Valuable
Capital, Winbull Securities, Hafoo Securities, and M&F Asset Management.
The regulator has not publicly confirmed whether these earlier actions are
connected to the suspected IPO scheme disclosed today.
New Hong Kong Order Follows China’s $271 Million Action
The Hong Kong restriction comes just over two months after
Chinese regulators proposed
a US$271 million penalty against Futu.
The China Securities Regulatory Commission alleged that
Futu-related entities conducted securities brokerage, public fund sales, and
futures business in mainland China without the required licenses or approvals.
Futu recorded the full proposed charge in its first-quarter
accounts. Consequently, its quarterly
net income dropped 61% to HK$831 million, even as revenue increased almost
25% and funded accounts rose to 3.59 million.
The penalty also triggered a sharp market reaction. Futu
shares dropped 27.5% when the action was disclosed and remained around 50%
below their late-2025 peak in early June. However, S&P
maintained Futu’s investment-grade rating, citing its capitalization,
position in Hong Kong, and expansion outside mainland China.
Futu was not alone in facing enforcement action. Chinese
authorities also targeted Tiger Brokers and Longbridge as part of a wider
campaign against offshore platforms serving mainland investors without domestic
brokerage licenses.
Under the regulatory plan, existing mainland clients will
have two years to sell their holdings and withdraw funds. As Finance
Magnates Intelligence reported, Futu’s mainland customers represent
approximately 13% of its funded accounts but about 20% of its revenue.
The mainland enforcement and the latest Hong Kong
restriction concern different alleged conduct. Crucially, the SFC has
explicitly stated that Futu itself is not a target of the suspected IPO fraud
investigation.
Hong Kong’s Securities and Futures Commission (SFC) has
ordered Futu Securities International to freeze up to HK$125.25 million
(approximately US$16.1 million) in client assets linked to suspected initial
public offering fraud.
According to the regulator’s
announcement, the accounts are held by an entity suspected of participating
in a scheme intended to create a false or artificial appearance of demand for
shares offered through an IPO.
The SFC did not identify the entity, the company conducting
the offering, or whether the securities have already been listed.
The regulator stressed that Futu is not the subject of its
investigation. The restriction does not affect the broker’s operations or
accounts belonging to its other clients.
Without the SFC’s prior written consent, Futu cannot trade,
transfer, withdraw, dispose of, or otherwise process the affected assets up to
the amount specified in the notice. The broker is also prohibited from helping
another person deal with the assets.
Futu must immediately notify the regulator if it receives
instructions concerning the restricted funds or securities.
“The SFC considers that the issue of the restriction notice
is desirable in the interest of the investing public and in the public
interest,” the watchdog stated. Its investigation remains ongoing.
The order was issued under Sections 204 and 205 of Hong
Kong’s Securities and Futures Ordinance. These provisions allow the SFC to
restrict a licensed corporation’s handling of client assets while suspected
misconduct is investigated.
Futu Securities International holds licenses covering seven
categories of regulated activity in Hong Kong, including securities and futures
dealing, leveraged foreign exchange trading, automated trading services, and
asset management.
The brokerage is part of Nasdaq-listed Futu Holdings, which
operates the Futubull and Moomoo investment platforms.
Not Futu’s First Client Account Freeze
This is not the first time the Hong Kong regulator has
instructed Futu to restrict client accounts without accusing the broker of
wrongdoing.
In 2021, the SFC ordered
Futu and another local brokerage to freeze accounts linked to a suspected
social media-driven pump-and-dump operation. That investigation concerned
trading in two Hong Kong-listed companies.
The regulator also issued restrictions against Futu and two
other brokers in 2019 over client
accounts connected to suspected misconduct involving derivative warrants.
More recently, a restriction notice served on Futu on 25
June 2026 and published in the Hong Kong Government Gazette on 10 July covered
HK$7.31 million held in a single client account.
Around the same time, the SFC published separate notices
involving accounts at Webull Securities, Tiger Brokers, Longbridge, Valuable
Capital, Winbull Securities, Hafoo Securities, and M&F Asset Management.
The regulator has not publicly confirmed whether these earlier actions are
connected to the suspected IPO scheme disclosed today.
New Hong Kong Order Follows China’s $271 Million Action
The Hong Kong restriction comes just over two months after
Chinese regulators proposed
a US$271 million penalty against Futu.
The China Securities Regulatory Commission alleged that
Futu-related entities conducted securities brokerage, public fund sales, and
futures business in mainland China without the required licenses or approvals.
Futu recorded the full proposed charge in its first-quarter
accounts. Consequently, its quarterly
net income dropped 61% to HK$831 million, even as revenue increased almost
25% and funded accounts rose to 3.59 million.
The penalty also triggered a sharp market reaction. Futu
shares dropped 27.5% when the action was disclosed and remained around 50%
below their late-2025 peak in early June. However, S&P
maintained Futu’s investment-grade rating, citing its capitalization,
position in Hong Kong, and expansion outside mainland China.
Futu was not alone in facing enforcement action. Chinese
authorities also targeted Tiger Brokers and Longbridge as part of a wider
campaign against offshore platforms serving mainland investors without domestic
brokerage licenses.
Under the regulatory plan, existing mainland clients will
have two years to sell their holdings and withdraw funds. As Finance
Magnates Intelligence reported, Futu’s mainland customers represent
approximately 13% of its funded accounts but about 20% of its revenue.
The mainland enforcement and the latest Hong Kong
restriction concern different alleged conduct. Crucially, the SFC has
explicitly stated that Futu itself is not a target of the suspected IPO fraud
investigation.
