Date
17 January 2017
Citadel, which manages about US$26 billion, has made it a priority to ramp up investing in China. Photo: Bloomberg
Citadel, which manages about US$26 billion, has made it a priority to ramp up investing in China. Photo: Bloomberg

US hedge fund says China account suspended amid market probe

US-based hedge fund Citadel LLC has had one of its accounts in China suspended as regulators try to stem a stock market free fall.

Securities regulators launched an investigation into automated trading and restricted 24 stock accounts suspected of influencing stock prices but did not name names.

On Sunday, Citadel said one of the accounts at a unit that helps clients buy and sell securities was among them, according to the Wall Street Journal.

The China Securities Regulatory Commission said it is investigating more than 50 instances of suspected securities violations and broken promises not to sell down share holdings as the country’s stock markets plunged in June and July.

The Citadel account in question was a client account, a person familiar with the matter said.

“We can confirm that while one account managed by Guosen Futures Ltd. –Citadel (Shanghai) Trading Ltd.– has had its trading on the Shenzhen Exchange suspended, we continue to otherwise operate normally from our offices, and we continue to comply with all local laws and regulations,” a Citadel spokesman said.

China’s market collapsed after a steep rally earlier this year fueled with borrowed money and encouraged by editorials in state-owned newspapers.

The gains were driven by what in many cases resembled gambling by mom-and-pop investors.

The government’s effort to stem the slide includes big purchases of stock by state-controlled companies.

But it also involves scrutiny of individual traders and stock-trading accounts amid a search for what state media have called “malicious” forces.

Citadel, one of the world’s largest hedge funds with about US$26 billion under management, has made it a priority to ramp up investing in China.

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CG/RA

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