SFC Halts Chabaidao Trading in IPO Probe
HK01 · 4 SOURCESabout 2 hours ago5 MIN
Summary
Hong Kong’s Securities and Futures Commission has escalated an IPO market misconduct probe by ordering a trading halt in Sichuan Baicha Baidao Industrial Co., Ltd., known as Chabaidao, from 9am on Tuesday while it investigates suspected artificial demand in the company’s share sale. The regulator also moved against two suspected groups tied to Chabaidao, Biokangtai and Tianju Dihe, freezing assets worth almost HK$5 billion in what it described as the largest restriction amount in comparable cases.
Key Points
- The SFC said two groups allegedly joined fraudulent schemes to create a false or misleading appearance of demand for shares in three IPOs: Chabaidao, Biokangtai and Tianju Dihe.
- Under Rule 8(1) of the Securities and Futures (Stock Market Listing) Rules, the SFC directed the Stock Exchange to suspend Chabaidao trading from 9am on October 13.
- In the first suspected group, six brokers received restriction notices covering accounts of Sun Ran (孫然) and eight related companies, with assets capped at HK$4.379 billion.
- In the second suspected group, 29 brokers were barred from dealing with accounts of Liu Haoran (劉浩然), The Reynold Lemkins Group (Asia) Limited and Kaufmann & Company Pan-Asia Limited up to HK$285 million.
- The SFC said some IPO proceeds may have been transferred out under undisclosed agreements for supposed financial product investments, potentially channeling funds back to major placees or connected persons.
Why It Matters
For Hong Kong investors, the immediate issue is market integrity in new listings: the SFC says Chabaidao’s IPO may have been artificially manipulated, and it has preserved assets that could later be used in restitution proceedings for affected investors. The regulator also stressed that the brokers receiving restriction notices are not investigation targets and that their normal operations and other clients are unaffected.