Trading Firm Accuses Insiders of $100 Million Profit from Chinese Brokerage Crackdown

Susquehanna International Group, a prominent trading firm, has filed a lawsuit alleging that unknown individuals made approximately $100 million by trading on non-public information about China's impending crackdown on online brokerages. The suit, filed in Pennsylvania federal court, seeks to identify the traders and recover profits allegedly gained through illegal insider trading.

The complaint centers on the stock performance of Futu Holdings Ltd. and Tiger Brokers Inc., two popular online trading platforms that cater to mainland Chinese investors. In late 2020 and early 2021, these companies experienced significant stock price increases. However, in late 2021, Chinese regulators began enforcing long-standing rules that restricted offshore trading by mainland residents, leading to a sharp decline in the stocks of Futu and Tiger Brokers.

Susquehanna claims that the individuals in question possessed insider information about the timing and scope of these regulatory actions. This knowledge allowed them to allegedly bet against the stocks of Futu and Tiger Brokers, or profit from their decline, before the information became public. The firm contends that this constitutes a fraudulent scheme and a violation of securities laws.

While the lawsuit does not name specific individuals, it names Futu and Tiger Brokers as defendants, arguing that they are best positioned to help identify the alleged wrongdoers. Susquehanna is seeking to compel the companies to reveal information about the trades made during the relevant period. The outcome of the lawsuit could have implications for regulatory oversight and insider trading enforcement within the financial sector, particularly concerning cross-border investments and the flow of market-sensitive information.