Futu Executives Named in Securities Class Action Over Unlicensed Operations

The legal action centers on claims under Section 20(a) of the Securities Exchange Act, accusing the executives of controlling the company while it operated without necessary licenses from the China Securities Regulatory Commission (CSRC). Plaintiffs contend that Li and Chen personally certified SEC filings that failed to disclose the risks of regulatory non-compliance, despite clear warnings issued by the CSRC as early as December 2022.

Financial fallout for shareholders followed a sharp decline in May 2026, when Futu shares plummeted 27.5% in a single day. This drop occurred after the CSRC proposed a penalty of RMB 1.85 billion against the firm. The complaint asserts that during the three-year class period, the company continued to report robust trading volumes and client growth without acknowledging that these figures were derived from operations lacking the required government approvals. Joseph E. Levi of Levi & Korsinsky, the firm representing the class, stated that corporate officers assume personal responsibility for the accuracy of public disclosures when they certify financial reports under the Sarbanes-Oxley Act.