Futu Holdings Faces Securities Lawsuit Over Regulatory Non-Compliance

The lawsuit targets the period between May 24, 2023, and May 27, 2026, alleging that Futu continued to conduct securities and futures business in mainland China without the mandatory licenses. Plaintiffs contend these unauthorized operations were a primary driver of the company's reported growth, which saw paying clients jump from 1.5 million in early 2023 to 2.8 million by mid-2025. According to the complaint, Futu failed to separate these metrics from its authorized business, effectively inflating its financial performance and misleading investors about the sustainability of its revenue streams.

Regulatory scrutiny intensified when the China Securities Regulatory Commission (CSRC) proposed penalties totaling approximately USD 271 million—comprising RMB 470 million in illegal gains and RMB 1.38 billion in fines. When this news broke on May 22, 2026, Futu shares plummeted 27.5%, stripping $34.10 of value from each share in a single trading session. Investors have until August 25, 2026, to apply for lead plaintiff status in the ongoing class action, a role that allows participants to oversee the litigation process. Joseph E. Levi, lead attorney for the firm, noted that the core issue remains the lack of transparency regarding material risks, which left shareholders unable to gauge the true economic health of their investments.