Futu Holdings Faces Securities Class Action Over Regulatory Penalties

The lawsuit claims that Futu Holdings (NASDAQ: FUTU) misled shareholders by failing to disclose the full extent of its non-compliance with Chinese regulatory requirements. Despite a public warning from the China Securities Regulatory Commission (CSRC) in December 2022 regarding unauthorized cross-border operations, the company continued to report rising trading volumes and client assets. The complaint alleges that these financial results were bolstered by revenue generated from business activities that were already under intense regulatory scrutiny.

The situation escalated on May 22, 2026, when Futu disclosed that the CSRC had proposed penalties totaling RMB 1.85 billion, or approximately USD 271 million, for illegal gains and regulatory violations. Following the disclosure, shares of Futu fell 27.5%, closing at $89.76 and erasing $34.10 per share in value. An additional decline occurred on May 28, 2026, as the company’s first-quarter results for 2026 quantified the financial impact of these penalties.

Joseph E. Levi of Levi & Korsinsky LLP, the firm representing the plaintiffs, noted that the chronology of the company’s disclosures suggests a failure to provide adequate notice regarding evolving regulatory threats. While Futu's annual reports mentioned potential rectification measures, the lawsuit argues that such language obscured the severity of the company's unlicensed status. Investors who suffered losses during the specified class period may contact the firm for a case evaluation, though no immediate action is required for those who wish to remain as absent class members.