China freezes US$1 bln worth of shares amid probe of fund boss

November 12, 2015 08:47
Xu Xiang, one of China's best known hedge fund chiefs,  is being investigated for alleged insider trading and stock manipulation. Photo: Business Times

Chinese police have frozen US$1 billion worth of shares in listed companies as part of an investigation into one of the country's best-known hedge fund managers.

Xu Xiang is being investigated for alleged insider trading and stock manipulation, Bloomberg reports.

Authorities imposed a two-year freeze on 90 million shares Xu’s Zexi Investment holds in Shanghai-based developer Deluxe Family Co., according to a stock-exchange statement from Deluxe on Tuesday night.

At yesterday’s closing price, that stake was worth 1.16 billion yuan (US$182 million.)

Xu, known in China as “hedge fund brother No. 1”, is one of the targets in a wave of investigations as the government tries to assign blame and clean up the market after a summer stock rout.

He was detained on the highway between Shanghai and Ningbo on Nov. 1, China National Radio reported.

In the eastern city of Ningbo, another firm also reported a lock-up, adding to restrictions earlier imposed on stakes held by Xu’s mother, Zheng Suzhen. Zheng hasn’t been named by the authorities as being under investigation.

The total value of stakes frozen in four companies is US$1 billion, based on Tuesday’s closing prices.

Corruption checks are taking place across China’s financial industry as the Communist Party’s Central Commission for Discipline Inspection vets regulators, the nation’s biggest banks, and sovereign-wealth fund China Investment Corp.

Those checks add to post-rout probes that have snared executives from Citic Securities Co., the nation’s top brokerage, and a senior official at the China Securities Regulatory Commission.

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