Hong Kong regulators freeze record 4.6 billion HKD over IPO fraud

The Securities and Futures Commission (SFC) of Hong Kong has ordered the freezing of over 4.6 billion Hong Kong dollars, marking the largest asset freeze in the regulator's history. The action follows allegations of initial public offering (IPO) manipulation.

As part of this intervention, the SFC suspended trading for the bubble tea chain Chabaidao (Sichuan Baicha Baidao Industrial), the biopharmaceutical firm Cloudbreak Pharma, and the technology company Tianju Dihe. Investigators suspect these groups created artificial demand for shares during their IPOs. The scheme allegedly involved channeling raised funds through financial products and back to primary underwriters or related entities to repurchase shares and artificially inflate prices on the secondary market.

Prior to the suspension, Chabaidao's shares had fallen 77% from their launch price. Additionally, regulators in Macau issued restriction orders to 35 brokerages, involving approximately 4.38 billion Hong Kong dollars linked to the schemes involving Chabaidao and Cloudbreak.