Hong Kong’s securities watchdog is investigating a suspected case of rigging an initial public offering to create a false impression of demand.

The Securities and Futures Commission directed the stock exchange to suspend Sichuan Baicha Baidao Industrial Co’s trading from 9 am on Oct 13 in Hong Kong. The regulator said it has “serious concerns that Baicha’s IPO may have been rigged,” according to a statement sent Tuesday after the market closed. The company’s market value is HK$5.9 billion ($752 million).

Baicha raised about $330 million in April 2024 in what was at the time Hong Kong’s biggest first-time share sale of the year. Its shares plunged 27 percent on their first day and never traded above the offer price. China International Capital Corp was the sole sponsor of the IPO. The retail tranche was 0.5 times subscribed, while institutional investors bid for 1.1 times the shares initially made available.

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The Hong Kong Special Administrative Region is in the midst of a bumper year for IPO proceeds, driven by a series of listings by Chinese mainland companies along the artificial intelligence supply chain. As dealmaking ramped up, with hundreds of listings in the pipeline, authorities have sounded the alarm on deal quality. They’ve also begun to tighten scrutiny of bankers’ resources and document quality.

Separately, the SFC issued restriction notices to 31 brokers, prohibiting them from dealing with or processing assets relating to two syndicates on three IPOs. The first syndicate is linked to the listing of Baicha, as well as that of Cloudbreak Pharma Inc. The regulator restricted dealing in assets held in client accounts of up to HK$4.4 billion — the largest such notice in SFC history — among six brokers.

The watchdog also restricted 29 brokers to deal assets of up to HK$285 million in client accounts related to the IPO of Tianju Dihe (Suzhou) Technology Co Ltd.

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“We believe that the actions taken to date have significantly disrupted two suspected syndicates which may have been involved in IPO-rigging cases,” SFC’s Executive Director of Enforcement Michael Duignan said in the statement.

The brokers who received the restriction notices aren’t the subjects of the SFC’s investigations. The restriction notices do not affect the brokers or their other clients, the watchdog said in the statement.

The SFC said its investigations are continuing and it won’t make any further comments while they are underway.