The Hong Kong Securities and Futures Commission (SFC) and the Independent Commission Against Corruption (ICAC) conducted a joint operation codenamed “Fuse” targeting suspected insider dealing involving corruption, with senior executives of three licensed corporations, including two securities firms and a hedge fund management firm, as persons of interest. Officers searched 14 locations, including the licensed corporations’ offices and the arrestees’ residences. The ICAC arrested six men and two women aged 35 to 60, including senior executives of the two securities firms and the hedge fund management firm, as well as a middleman. The suspected conduct involves bribes of over 4 million paid by the hedge fund management firm’s owner to executives at the securities firms in exchange for confidential information about share placements of various Hong Kong-listed companies before public announcements; the hedge fund allegedly used this information to establish short positions through short selling and/or short equity swap contracts, generating profits of around 315 million when the placements were announced and share prices fell. The matter originated from an SFC insider dealing investigation that identified potential corruption and was referred to the ICAC, while the SFC continues to examine suspected insider dealing and other misconduct under the Securities and Futures Ordinance. The suspected offences include breaches of the Prevention of Bribery Ordinance, handling property believed to be proceeds of indictable offences under the Organized and Serious Crimes Ordinance, and offences under the Securities and Futures Ordinance; the investigation is ongoing and the authorities indicated they will not provide further comment.

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