Futu shares fell 27.5% on May 22 after the CSRC proposed a 1.85 billion yuan penalty; investors have until Aug. 25 to seek lead plaintiff status.
China's securities regulator proposed a penalty of about 1.85 billion yuan ($271 million) against Futu Holdings Ltd. The May 22 disclosure cut the online broker's stock 27.5% in one session. Kaplan Fox & Kilsheimer LLP filed a class action over the penalty. Investors who bought Futu shares between May 24, 2023 and May 27, 2026 have until Aug. 25 to seek appointment as lead plaintiff.
The same morning, Reuters reported the CSRC, joined by seven other government agencies including the central bank, had launched a crackdown on brokers it accused of illegally moving money to foreign markets. The regulator's targets included "overseas firms and their local partners operating without approval," the article said. Online brokers including Futu "would be penalised for soliciting business in China without an onshore licence," the securities regulator said.
Futu also disclosed a Notification Letter from the CSRC that day. The regulator said certain Futu entities in mainland China and Hong Kong, which the company calls the Related Companies, "without obtaining the requisite licenses or approval, conducted securities business, public fund sales business and futures business in mainland China." It proposes to order the Related Companies to rectify or cease such activities, the company said.
The stock fell $34.10, or 27.5%, on May 22, closing at $89.76.
On May 28, before the market opened, Futu reported first-quarter net income of HK$831 million (US$106 million), after giving effect to the proposed penalties. The provision comprises confiscation of illegal gains of about RMB470 million ($69.21 million) and fines of roughly RMB1.38 billion, together about RMB1.85 billion. Futu shares fell $5.31, or 4.8%, to close at $104.91, above the $89.76 close from May 22.
AlphaScala's FUTU stock page assigns the shares an Alpha Score of 71, labelled Moderate.
The complaint alleges the company failed to disclose, throughout the class period, that it was not in compliance with CSRC requirements. Futu continued to serve mainland Chinese clients without the required approvals, the complaint says. It also alleges the company was reasonably likely to face regulatory penalties, including the disgorgement of ill-gotten gains, and that Futu's financial results were overstated as a result.
Kaplan Fox said investors who suffered losses can contact the firm by email at pmayer@kaplanfox.com or by phone at (646) 315-9003. Class members do not need to seek lead plaintiff status to share in any possible recovery. The deadline to move the court for appointment as lead plaintiff is Aug. 25.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.