Futu Holdings disclosed that it has received an investigation notice and a penalty pre-notification from the China Securities Regulatory Commission (CSRC), prompting a steep decline in its share price before the market opened. The proposed regulatory action centers on alleged unlicensed securities and related activities conducted for mainland China users.
The CSRC and its Shenzhen bureau propose a total fine of RMB1.85 billion, equivalent to about $271 million, against Futu. In addition, regulators intend to impose a personal fine of RMB1.25 million on the company’s founder and CEO, Li Hua. The case remains subject to further regulatory proceedings before any final decision is made.
Regulatory Allegations and Proposed Measures
According to the CSRC, certain Futu-related entities in mainland China and Hong Kong engaged in securities trading, public fund sales, and futures business in mainland China without obtaining the necessary approvals. The regulator states that these activities violated China’s Securities Law, Securities Investment Fund Law, and Futures and Derivatives Law.
Authorities propose ordering Futu to halt or correct the activities in question, confiscate gains linked to the alleged violations, and impose financial penalties. The proposed RMB1.85 billion fine would be accompanied by the confiscation of related income, though the specific amount of such income was not disclosed in the source information.
Futu’s Response and Mainland Exposure
Futu stated that it has been in communication with the regulator regarding the case. The company said it has already implemented rectification measures related to its mainland operations, although it did not detail those measures in the disclosed information.
Futu also indicated that mainland China accounts represented about 13% of its total funded accounts as of the end of the first quarter of 2026. This highlights the significance, but not dominance, of mainland users in the company’s overall client base.
Wider Regulatory Scrutiny of Online Brokerages
On the same day as the Futu disclosure, Chinese authorities signaled similar enforcement actions against other online brokerages. These included a New Zealand unit of Tiger Brokers and a Hong Kong-based entity of LongBridge Securities.
The actions underscore rising regulatory scrutiny of platforms that provide cross-border investment services to mainland China users, particularly where licensing or approval requirements may not have been fully met. The outcome of the Futu case and related proceedings against other firms remains pending, with Futu retaining the right to submit explanations, present a defense, and request a hearing before any final decision is issued.
