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Limited seats available, first come first served. Let us journey together toward sustainability! [Click to register] The SFC has made a major move, taking aim at three companies suspected of IPO market manipulation. Author | Dai Xianchao. Editor | Wuren. Source | Yuansu elements. Three already-listed companies are involved, with HK$4.6 billion in assets frozen—this is likely the most severe IPO market manipulation case in the capital markets in recent years.
On October 13, 2026, the Hong Kong Securities and Futures Commission (SFC) suddenly took action, pulling three already-listed "problem students" into the spotlight all at once: CHABAIDAO (02555.HK), Cloudbreak-B (02592.HK), and Tianju Dihe, every single one pointing to the same phrase—IPO market manipulation.
This investigation concerns suspected artificial market manipulation in IPO placements. Regulators suspect that external syndicates used fund flows to act as new share placees, creating a false appearance of subscription demand. The HK$4.6 billion in frozen assets belongs to the external entities under investigation. The case is still under investigation, and all allegations remain suspicions with no final determination yet. The core issue still to be verified is whether listed company management participated in the relevant arrangements.
Tianju Dihe: Opened at 113, Closed at 60
Tianju Dihe (02479.HK), branded as "Juhe Data," operates an API data business and listed on the Hong Kong Stock Exchange on June 28, 2024, at an issue price of HK$83.33. Its trading debut was nothing short of performance art—the stock was immediately pushed up to HK$113 at the open, a 35.6% premium over the issue price, reached an intraday high of HK$117.2, then crashed to close at HK$60.15, falling nearly 50% from its peak within a single day, closing down 27.8%. Looking back now, that big bullish candle at the open was never "investor enthusiasm"—it was the manipulation syndicate blatantly offloading shares. The stock price has never recovered since.
What shocked everyone even more was that within less than a year of listing, the company ran into trouble. In April 2025, the company suspended trading citing "difficulty completing financial reports," and the suspension lasted 18 months. During the suspension, Grant Thornton was brought in for a forensic investigation, which uncovered three murky transactions: HK$63.1 million in prepayments to four chip suppliers for purchasing Nvidia chips, a US$10 million cash management note, and a prepayment for top-up services. Once the investigation results came out, the executive team was immediately reshuffled. On August 30, 2026, founder, Chairman and CEO Zuo Lei, Executive Director and Company Secretary Yang Yanjun, and Chief Financial Officer Shao Chuangye all resigned together, with the official explanation being just six words: "involving matters under investigation." On September 17, the legal representative was officially changed to Wang Haojin. The stock price before suspension was HK$65, with a market capitalization of approximately HK$3.258 billion. The annual and interim reports have been belatedly filed, but the stock remains suspended from trading.
Cloudbreak-B: Ophthalmology Biotech Burning Through HK$2.9 Billion
Cloudbreak-B is a clinical-stage ophthalmic drug company that listed on the Hong Kong Stock Exchange on July 3, 2025, under the 18A pre-revenue biotech framework, at an issue price of HK$10.10, with UBS, CCB International, and Huatai International as joint sponsors. The company has two proprietary technology platforms—the MKI multi-kinase inhibitor platform and the SFA+ non-aqueous topical drug delivery system—with a pipeline of 10 candidate drugs, 6 in clinical trials and 4 in preclinical stages. Sounds impressive. But the problem is that not a single one has been approved for market, and the company has zero revenue. In 2024, the company had only about US$10 million in one-time revenue, which dropped to zero starting in 2025. Losses have worsened year after year. In 2024, operating loss was approximately US$36.58 million and net loss was approximately US$99.13 million. In 2025, as CBT-001 advanced to Phase III clinical trials, R&D expenses jumped from US$37.95 million to US$66.8 million, with full-year operating loss expanding to US$107.3 million and net loss of US$67.66 million. In the first half of 2026, another US$47.95 million was lost. Cumulative losses over five and a half years reached 2.9 billion RMB.
What about cash reserves? At the end of 2024, US$34.86 million; at the end of 2025, US$40.15 million; by June 30, 2026, only US$32.75 million remained. At the cash burn rate of the first half, the money on hand would only last another three quarters. On September 10, 2026, at 9:00 AM, the SFC directly ordered the stock exchange to suspend trading pursuant to Section 8(1) of the Securities and Futures (Stock Market Listing) Rules. The last trading day before suspension closed at HK$1.19, with a market capitalization of approximately HK$1.1 billion, down 88% from the issue price. Only 14 months passed from listing to being ordered to suspend trading.
CHABAIDAO: "First Franchise Tea Drink Stock" Loses HK$13 Billion in Market Value Two Years After Listing
On October 13 at 9:00 AM, the SFC ordered the suspension of trading in Sichuan Baicha Baidao Industrial Co., Ltd. under the same rules. The last trading day before suspension closed at HK$4.035, with a total market capitalization of approximately HK$5.96 billion, down about 77% from its April 2024 issue price of HK$17.5. CHABAIDAO is a franchise-model new tea beverage brand originating from Chengdu. It listed on the Hong Kong Stock Exchange on April 23, 2024, issuing 148 million shares and raising HK$2.586 billion. It was called the "first franchise tea drink stock" and was the second new tea beverage company to list in Hong Kong after Nayuki.
It didn't perform well on its debut day either—opening down 10.06%, with an intraday maximum drop of 38%, barely recovering a little by the close to HK$12.80, down 26.86%, with a first-day market capitalization of HK$18.9 billion. The subsequent trajectory was like a roller coaster. In September 2024, it fell to a low of HK$3.98, then a month later rallied back to HK$16, almost returning to the issue price; then came a long, slow decline, dropping another 36% since the start of 2026.
Fundamentals also deteriorated alongside the stock price. In the prospectus, revenue for 2021 to 2023 was 3.64 billion, 4.23 billion, and 5.7 billion RMB respectively, with a compound annual growth rate of 25%, which looked very attractive. But in the first year after listing, revenue dropped directly to 4.918 billion RMB, a 14% contraction from 2023, with net profit of 480 million RMB. In 2025, it recovered to 5.395 billion RMB in revenue and 805 million RMB in net profit, but revenue simply could not return to pre-listing levels. By the first half of 2026, revenue of 2.655 billion RMB grew only 6.2%, and net profit of 345 million RMB grew only 3.5%. Store expansion has also peaked. As of the end of June 2026, there were 8,863 stores globally, with 8,791 in mainland China, but only 170 net new stores in mainland China during the first half; growth relied entirely on overseas expansion, with overseas stores surging from 38 at the end of 2025 to 72.
SFC Takes Action: Two Syndicates, 35 Brokerages, HK$4.6 Billion Frozen
On October 13, 2026, the SFC formally announced that it had taken action against two syndicates suspected of IPO manipulation and, pursuant to Section 8(1) of the Securities and Futures (Stock Market Listing) Rules, ordered the stock exchange to suspend trading in CHABAIDAO shares from 9:00 AM that day. The SFC stated that it was highly concerned that CHABAIDAO's IPO may have been artificially manipulated to create false or non-genuine demand for its shares, and that suspending trading during the ongoing investigation was necessary to maintain a fair market and protect investor interests.
According to SFC disclosures, one syndicate is suspected of manipulating both the Cloudbreak-B and CHABAIDAO IPOs simultaneously. Client Sun Ran and eight affiliated companies (including AvantTeam, Citadel Wealth, etc.), involving 6 brokerages, have been issued restriction notices prohibiting them from disposing of account assets, with a limit of up to HK$4.379 billion. In addition, client Liu Haoran and three companies including The Reynold Lemkins Group, involving 29 brokerages, had approximately HK$285 million in assets frozen. This syndicate specialized in the Tianju Dihe IPO.
The SFC specifically noted that some IPO proceeds were transferred out of the companies pursuant to undisclosed private agreements between the listed companies and the manipulation syndicates, operated under the guise of "financial product investments," and ultimately flowed back into the pockets of principal placees and their affiliates. Simply put, it was "using your own money to buy your own stock," creating a false appearance of "can't get enough." The SFC also emphasized that the brokerages that received restriction notices are not subjects of the investigation, and the relevant measures do not affect their normal business or other clients. A total of 35 brokerages, HK$4.664 billion, and 3 IPOs—this is the largest IPO market manipulation sweep by the SFC in recent years. The story is not over yet. Behind the two syndicates are 35 brokerages, and the market is watching closely to see how many more companies will be uncovered.
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