Hong Kong’s Securities and Futures Commission (SFC) hasordered Futu Securities International to freeze up to HK$125.25 million(approximately US$16.1 million) in client assets linked to suspected initialpublic offering fraud.According to the regulator’sannouncement, the accounts are held by an entity suspected of participatingin a scheme intended to create a false or artificial appearance of demand forshares offered through an IPO.The SFC did not identify the entity, the company conductingthe offering, or whether the securities have already been listed.Futu Is Not under InvestigationThe regulator stressed that Futu is not the subject of itsinvestigation. The restriction does not affect the broker’s operations oraccounts belonging to its other clients.Without the SFC’s prior written consent, Futu cannot trade,transfer, withdraw, dispose of, or otherwise process the affected assets up tothe amount specified in the notice. The broker is also prohibited from helpinganother person deal with the assets.Futu must immediately notify the regulator if it receivesinstructions concerning the restricted funds or securities.“The SFC considers that the issue of the restriction noticeis desirable in the interest of the investing public and in the publicinterest,” the watchdog stated. Its investigation remains ongoing.The order was issued under Sections 204 and 205 of HongKong’s Securities and Futures Ordinance. These provisions allow the SFC torestrict a licensed corporation’s handling of client assets while suspectedmisconduct is investigated.Futu Securities International holds licenses covering sevencategories of regulated activity in Hong Kong, including securities and futuresdealing, leveraged foreign exchange trading, automated trading services, andasset management.The brokerage is part of Nasdaq-listed Futu Holdings, whichoperates the Futubull and Moomoo investment platforms.Not Futu’s First Client Account FreezeThis is not the first time the Hong Kong regulator hasinstructed Futu to restrict client accounts without accusing the broker ofwrongdoing.In 2021, the SFC orderedFutu and another local brokerage to freeze accounts linked to a suspectedsocial media-driven pump-and-dump operation. That investigation concernedtrading in two Hong Kong-listed companies.The regulator also issued restrictions against Futu and twoother brokers in 2019 over clientaccounts connected to suspected misconduct involving derivative warrants.More recently, a restriction notice served on Futu on 25June 2026 and published in the Hong Kong Government Gazette on 10 July coveredHK$7.31 million held in a single client account.Around the same time, the SFC published separate noticesinvolving accounts at Webull Securities, Tiger Brokers, Longbridge, ValuableCapital, Winbull Securities, Hafoo Securities, and M&F Asset Management.The regulator has not publicly confirmed whether these earlier actions areconnected to the suspected IPO scheme disclosed today.New Hong Kong Order Follows China’s $271 Million ActionThe Hong Kong restriction comes just over two months afterChinese regulators proposeda US$271 million penalty against Futu.The China Securities Regulatory Commission alleged thatFutu-related entities conducted securities brokerage, public fund sales, andfutures business in mainland China without the required licenses or approvals.Futu recorded the full proposed charge in its first-quarteraccounts. Consequently, its quarterlynet income dropped 61% to HK$831 million, even as revenue increased almost25% and funded accounts rose to 3.59 million.The penalty also triggered a sharp market reaction. Futushares dropped 27.5% when the action was disclosed and remained around 50%below their late-2025 peak in early June. However, S&Pmaintained Futu’s investment-grade rating, citing its capitalization,position in Hong Kong, and expansion outside mainland China.Futu was not alone in facing enforcement action. Chineseauthorities also targeted Tiger Brokers and Longbridge as part of a widercampaign against offshore platforms serving mainland investors without domesticbrokerage licenses.Under the regulatory plan, existing mainland clients willhave two years to sell their holdings and withdraw funds. As FinanceMagnates Intelligence reported, Futu’s mainland customers representapproximately 13% of its funded accounts but about 20% of its revenue.The mainland enforcement and the latest Hong Kongrestriction concern different alleged conduct. Crucially, the SFC hasexplicitly stated that Futu itself is not a target of the suspected IPO fraudinvestigation.This article was written by Damian Chmiel at www.financemagnates.com.