The legal action centers on a three-year period from May 24, 2023, through May 27, 2026. Plaintiffs contend that Futu executives maintained control over financial disclosures while omitting critical information about the firm's non-compliance with China Securities Regulatory Commission (CSRC) mandates. The regulatory scrutiny intensified on May 22, 2026, when the CSRC proposed a 1.85 billion RMB penalty against the company, triggering a 27.5% single-day collapse in Futu share prices.

Under Section 20(a) of the Securities Exchange Act, the complaint asserts that Li and Chen leveraged their authority to authorize public reports despite possessing material non-public information about ongoing regulatory risks. The filings specifically challenge the Sarbanes-Oxley certifications signed by the executives, arguing these documents failed to disclose that core business activities—including securities and fund sales—operated without required licenses. In addition to the corporate penalty, the CSRC has proposed a personal fine of 1.25 million RMB against Leaf Hua Li.