Hong Kong's securities watchdog has frozen HKD 91 million in assets across four brokerages, including US-based Interactive Brokers' local unit, following suspected market manipulation and unauthorized trades through compromised accounts.

SFC Freezes HKD 91 Million in Trading Accounts, Including Interactive Brokers

The Securities and Futures Commission (SFC) issued restriction notices to Interactive Brokers Hong Kong Limited and three local firms—SBI China Capital Financial Services, Monmonkey Group Securities, and Soochow Securities International Brokerage—blocking them from handling specific client assets without prior regulatory approval.

“The restriction notices prohibit the four brokers, without the SFC’s prior written consent, from disposing of or dealing with, assisting, counselling or procuring another person to dispose of or deal with certain assets in any way in the accounts up to a total of $91 million,” the official announcement explained. They are also required to notify the SFC if they receive any instructions regarding the aforesaid prohibitions.”

The unauthorized activities occurred between October 24 and November 6, raising concerns about cybersecurity protocols at major trading platforms. The regulator is working closely with Hong Kong Police's Cyber Security and Technology Crime Bureau and Commercial Crime Bureau to investigate the suspected account hacking incidents.

The official statement released by the SFC does not provide any details about the case. Finance Magnates reached out to the regulator for comment but had not received a response at the time of publication.

Interactive Brokers, which holds licenses for three types of regulated activities in Hong Kong, faces increased scrutiny as the only international broker implicated in the case. The other affected firms primarily serve the local market.

The company previously faced action from the SFC in 2018 when the regulator imposed a HKD 4.5 million fine for internal control failures between 2015 and 2016. At the time, the commission also reprimanded the company for inadequate internal controls that failed to prevent market disruptions caused by its execution of market orders. Additionally, it cited the lack of proper documentation for its electronic trading systems.

Record-Keeping Error in Stock Lending Program

Last month, Interactive Brokers was fined USD 475,000 by the Financial Industry Regulatory Authority (FINRA) for deficiencies in its share lending program. The brokerage has since settled the matter with the regulator.

According to the official “Acceptance, Waiver, and Consent (AWC)” letter, FINRA detailed that Interactive Brokers miscalculated the number of excess shares listed on European exchanges that were available for return to customers under the stock lending program.