Two of the world’s largest investment banks, JPMorgan Chase and UBS, have severed prime brokerage relationships with a hedge fund caught up in a widening insider trading investigation in Hong Kong, according to people familiar with the matter.

The move follows a major probe launched by Hong Kong’s Securities and Futures Commission and the Independent Commission Against Corruption into suspected insider dealing and bribery within the city’s financial sector.

Authorities have arrested multiple individuals and conducted searches of corporate offices and private residences as part of the investigation.

According to officials, the investigation centers on allegations that brokerage personnel accepted bribes exceeding four million Hong Kong dollars in exchange for confidential information about upcoming share placements.

Armed with advance knowledge of those transactions, a hedge fund is suspected of placing trades that generated profits of roughly three hundred fifteen million Hong Kong dollars.

In response to the unfolding investigation, JPMorgan and UBS moved to distance themselves from the hedge fund by ending or declining to continue prime brokerage relationships, which typically provide financing, trading and custody services for large investment funds.

Such relationships are critical for hedge funds operating in global equity markets, making the withdrawal of major banking partners a significant development.

The decision by the banks reportedly came before details of the investigation became public, reflecting heightened caution among global financial institutions amid increasing regulatory scrutiny in Hong Kong’s capital markets.

Financial groups have become more sensitive to potential compliance risks as regulators intensify enforcement against insider trading and market manipulation.

Authorities say the suspected scheme involved short selling shares ahead of new stock placements, a strategy that can generate substantial profits because share prices often fall when additional stock is issued into the market.

Hong Kong remains one of the world’s leading financial centers, and regulators have emphasized that maintaining transparency and investor confidence is a central priority.

The latest probe represents one of the most prominent market misconduct investigations in the city in recent years.

Analysts say the withdrawal of support from major global banks illustrates how quickly financial institutions move to limit exposure when clients become connected to regulatory investigations, particularly in markets where compliance standards are tightly enforced.