A pedestrian walks past a CITIC Securities Co branch in Shanghai.[Photo/Agencies]

CITIC Securities Co, China's biggest brokerage, may be acquired by a rival in a regulator-driven transaction if its woes deepen beyond existing management "turmoil" and regulatory and legal probes, according to Daiwa Securities Group Inc.

That's the worst-case scenario, Daiwa analysts led by Leon Qi said in a Nov 30 note that laid out four alternatives for what happens next for the firm.

In the aftermath of China's summer stock bust, CITIC and some of its executives have faced a series of investigations by the authorities. The company will face tighter control from its parent, CITIC Group Corp, people familiar with the matter said last month.

In a second scenario from Daiwa, efforts by CITIC Group to boost its control could see the parent increase its shareholding in CITIC Securities, after previously paring it back.

A third sees CITIC Securities combined with associated brokerage China Securities Co.

A fourth is that no further regulatory or legal issues emerge and CITIC Securities gradually emerges from the "short-term interruptions," the analysts said. Whatever happens, shareholders are "unlikely to face major downside," they said.

CITIC Securities shares have plunged 38 percent this year in Hong Kong, compared with a 5.4 percent decline in the benchmark Hang Seng Index.

The China Securities Regulatory Commission is investigating CITIC Securities over alleged breaches of rules on margin and short-selling contracts, the company said in a statement to Shanghai's stock exchange on Sunday.

Seven executives at CITIC Securities including President Cheng Boming have been under investigation for alleged offences including "insider trading," according to reports in August and September by the Xinhua News Agency.