Susquehanna Sues 100 John Doe Defendants Over $100 Million Insider Trading Scheme Tied to China Brokerage Crackdown

Bloomberg reported that Susquehanna Investment Group has sued 100 John Doe defendants in Manhattan federal court, seeking to unmask individuals it claims made at least $100 million trading on inside information about a Chinese government crackdown on cross-border brokerages.The Pennsylvania-based market-making firm, which says it was the counterparty on most of the alleged trades, is seeking to recover more than $70 million it lost in what it believes is one of the largest insider-trading schemes in recent memory. The allegations focus on 200,000 short-dated put option bets placed in the two weeks before China's May 22 announcement punishing brokers for flouting capital controls, with Futu Holdings and Up Fintech's Tiger Brokers singled out for soliciting business without an onshore license. Many trades were made through accounts at Interactive Brokers, Futu, and Tiger Brokers, and Susquehanna is seeking an order freezing certain accounts and authorizing subpoenas. The traders collectively spent $12 million on options, yielding more than $100 million in profit — a return exceeding 900%. Susquehanna alleges "powerful evidence" of material non-public information use, saying tips could have come from Chinese securities regulators or personnel at Futu or Tiger's TradeUP unit. "By way of comparison, Raj Rajaratnam's infamous insider trading scheme at Galleon Management yielded only approximately $53 million in profits," Susquehanna said in its complaint, referring to the hedge fund manager convicted in 2011.