SEC Launches Insider Trading Investigation; Susquehanna Loses Over $70 Million
Claire Weston
The SEC is investigating suspicious options trades placed just before China's May 22 crackdown on cross-border brokerages; market maker Susquehanna says it lost over $70 million and has sued to unmask the anonymous traders.
What happened?
Before China's eight regulators announced a crackdown on cross-border brokerages on May 22, a group of unidentified traders bought U.S.-listed options on Chinese brokerage stocks including Futu and Tiger Brokers.
They spent roughly $12 million on those options and walked away with at least $100 million in profit.
This means → someone placed a precisely timed bet before the news went public, earning a return above 8×. Susquehanna says insider trading is the only plausible explanation.
Why is Susquehanna the one suing?
Susquehanna is a major market maker — a firm that continuously quotes buy and sell prices, providing liquidity for options markets. It was the primary counterparty to these suspicious trades.
In plain terms = the money those anonymous traders made came largely out of Susquehanna's pocket — costing the firm more than $70 million.
Susquehanna filed suit in Manhattan federal court against 100 "John Does," acknowledging it does not yet know their identities but asking the court to help find out.
Where might the leak have come from?
In its complaint, Susquehanna suggests the traders may have received advance information from two possible sources: insiders at Chinese regulatory agencies, or insiders at Futu Holdings or Tiger Brokers' parent company Up Fintech Holdings.
This reflects a sensitive reality: cross-border regulatory actions involve multiple agencies on both sides of the Pacific. The longer the information chain, the higher the leak risk.
What is the status of the account freeze and subpoenas?
A federal judge has approved freezing the defendants' accounts at Interactive Brokers, Futu, and Up Fintech platforms.
The court also authorized Susquehanna to issue subpoenas to those platforms, demanding disclosure of account holders' identities.
Interactive Brokers confirmed it has cooperated with the freeze and will assist regulatory inquiries.
What is Futu and Tiger Brokers' own situation?
Both companies are themselves targets of the Chinese crackdown — eight agencies including the CSRC are penalizing firms that provided unlicensed overseas trading services to mainland Chinese residents.
Futu was fined RMB 1.85 billion (roughly $272 million). Founder Leaf Li (李华) saw his personal wealth drop by $1.7 billion in a single day.
This means → Futu and Tiger Brokers face a dual squeeze: fined by Chinese regulators on one side, subpoenaed to hand over client data by a U.S. court on the other.
Will this investigation actually lead anywhere?
The SEC has not commented publicly. The scope and progress of its probe remain unclear.
By convention, an SEC review can end without any enforcement action at all.
In plain terms = whether this case goes anywhere hinges on one thing: whether the subpoenas can unmask the anonymous traders. Without names, no enforcement can follow.
Content is for reference only, not financial advice.