SFC takes action against suspected IPO-rigging syndicates and suspends dealings in Baicha shares

On 13 October 2026, the Securities and Futures Commission (SFC) took enforcement action against two groups suspected of fraudulent schemes to create artificial demand for shares in IPOs. Pursuant to section 8(1) of the Securities and Futures (Stock Market Listing) Rules, the SFC directed the Stock Exchange of Hong Kong Limited to suspend trading in Sichuan Baicha Baidao Industrial Co., Ltd. (Baicha, stock code: 02555) with effect from 9:00 a.m. on the same day. The SFC has grave concerns that Baicha’s IPO may have been rigged to generate artificial demand for its shares; the suspension is necessary to maintain an orderly and fair market and protect investing public interests while the investigation proceeds. The SFC issued restriction notices to six brokers to freeze assets of up to HK$4,379,463,215 — the largest amount of its kind in SFC history — held in client accounts under Ms Sun Ran and nine associated entities. This syndicate is also suspected of fraud in connection with the IPO of Cloudbreak Pharma Inc. Separately, restriction notices were issued to 29 brokers to freeze assets of up to HK$285,030,265 in accounts held by Mr Liu Haoran and three associated entities, who are suspected of a fraudulent scheme relating to the IPO of Tianju Dihe (Suzhou) Technology Co., Ltd. The suspected syndicates allegedly transferred part of the IPO proceeds out of listed companies under undisclosed agreements for purported investments in financial products, secretly channelling such funds back to major IPO placees or their connected parties. Brokers receiving the restriction notices are not subjects of the investigation and the notices do not affect the brokers or their other clients. Without prior written consent from the SFC, the brokers are prohibited from disposing of or dealing with the relevant assets or executing instructions from the named entities, and must promptly notify the SFC upon receiving any instructions concerning restricted assets. The SFC considers preserving assets to be in the investing public and public interest, and involved parties may later be ordered to compensate harmed investors through restitution. SFC Chief Executive Officer Julia Leung stated that market integrity underpins fair capital markets and investor confidence, and the SFC adopts a zero-tolerance stance on IPO rigging, price manipulation and false market creation. SFC Executive Director of Enforcement Michael Duignan remarked that the actions have substantially disrupted the two suspected IPO-rigging syndicates; halting Baicha’s trading and preserving linked assets serves to protect investors and uphold Hong Kong market integrity, boosting confidence in the fairness of Hong Kong’s IPO market. The SFC’s investigations are ongoing and no further comments will be made during the investigation.