Hong Kong's securities regulator advised investors and shareholders to "exercise extreme caution" when dealing with the shares of Walnut Capital (HKG:0905), as the high concentration of shareholding in the company to a small number of stockholders could result in volatile share prices.

The watchdog said that following an investigation, its findings suggested that 19 shareholders held nearly 146.9 million shares in the financial services company, representing 13.98% of its issued share capital as of Aug. 25.

According to the findings, another 259.1 million, or 24.66%, shares were registered under the name of HKSCC Nominees at the firm's Hong Kong register of members, although they were not held in the Central Clearing and Settlement System.

Coupled with the 56.01% stake owned by the firm's CEO, they cornered 94.65% of Walnut Capital, according to the regulator, whose report was disclosed by the company itself on Wednesday.

As a result, other shareholders only held 56.2 million shares, or a 5.35% stake in the company, the regulator said.