Guotai Junan and CITIC Securities Involved in Hong Kong Stock Insider Short-Selling Case, ICAC Arrests Several Individuals

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Source: Alpha Factory DeepFund

Introduction: Precise shorting on the eve of rights issues—Hong Kong stock “mouse warehouse” gray industry is about to be uprooted.

In recent days, Hong Kong’s capital market has launched an unprecedented financial anti-corruption storm.

On the evening of March 11, media reports stated that the Hong Kong Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC) jointly launched a crackdown, targeting senior executives of licensed institutions suspected of insider trading and corruption, involving Cathay Securities Hong Kong subsidiary, CITIC Securities Hong Kong subsidiary, and hedge fund Wuji Capital.

On March 12, the ICAC announced that it had conducted a joint operation codenamed “Fuse” with the SFC on March 10 and 11 to combat suspected insider trading and corruption. Two securities firms, a hedge fund management company, and senior executives are all stakeholders in this case.

This is the largest raid on Hong Kong’s financial industry since 2017.

Incident: Rights Issue

During this joint operation, law enforcement searched 14 locations, including offices and residences of two securities firms and one hedge fund management company, and arrested six men and two women aged between 35 and 60. Among them, Pan Jupeng, head of ECM at Cathay Securities International, was the first to be publicly linked to the case.

Today, Cathay Securities International also announced that it has immediately suspended all operations, duties, and powers of the relevant employees.

Public information shows that Pan Jupeng graduated from the University of Macau with a degree in Business Administration and obtained an MBA from Syracuse University in the United States.

He joined Cathay Securities International in 2015, previously working in the sales and trading department at J.P. Morgan Hong Kong.

Pan has long been responsible for Hong Kong/US stock IPOs, GDRs, placements, block trades, and other projects. His recent investigation may be related to placement projects.

Reports indicate that senior management of two licensed securities firms received bribes exceeding HKD 4 million from the head of the licensed hedge fund management company, leaking confidential information about multiple Hong Kong-listed companies’ rights issues before official disclosure. This information was supposed to be confidential before public release.

After obtaining this confidential information, the hedge fund management company engaged in short selling related stocks and/or entered into stock short-swap contracts to establish short positions. When the companies announced their rights issues, the stock prices fell, and the hedge fund reportedly profited about HKD 315 million from these short positions.

Market insiders speculate that the ICAC investigation process was likely reverse-traced: first identifying abnormal trades, then focusing on the highly profitable funds during that period, following the trail to uncover the “insider.”

Uncovering Wuji Capital

Another involved party, Wuji Capital, is a rapidly rising asset management firm in recent years, focusing on “Middle Eastern capital + Hong Kong tech stocks.”

According to reports, Wuji Capital is not a newcomer to the Hong Kong market but was founded by former international investment bank professionals, backed by massive Middle Eastern capital, and deeply engaged in the Asian market. Its development trajectory is closely tied to recent prosperity in the Hong Kong stock market.

Public records show Wuji Capital was established in 2015, mainly funded by Middle Eastern sovereign wealth funds, family offices, and other long-term institutional investors. In 2024, it accelerated its Hong Kong market deployment, and in 2025, it fully expanded, participating in over 15 Hong Kong stock projects with a total investment exceeding HKD 15 billion through a combination of cornerstone investments, exclusive placements, and strategic secondary offerings.

Before this incident, Wuji Capital maintained a high-frequency investment pace. On March 9, 2026, it participated in a HKD 631 million strategic placement of Hei Zhi Ma Intelligent, which was its last major Hong Kong stock investment before the case. At that time, it also claimed to establish long-term strategic cooperation with Hei Zhi Ma Intelligent in AI, autonomous driving, and other fields.

As of now, the specific list of listed companies involved in this investigation has not been disclosed. #港股# brokerage #基金# Cathay Securities #CITIC Securities

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Editor: Song Yafang