BEIJING—U.S.-based hedge fund firm Citadel LLC said trading in
one of the accounts it manages in China has been suspended, as
regulators battle a steep slide in stock prices.
China's securities regulator said Friday it has launched a probe
into automated trading and has restricted 24 stock accounts
suspected of influencing stock prices. The government didn't name
any of the parties behind the restricted stock accounts. Citadel
said Sunday that one of the accounts at a unit that helps clients
buy and sell securities was among them.
In comments on its website, 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 Securities 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.
Last week, the securities regulator said the listed arm of
state-owned airplane maker Aviation Industry Corp. of China and two
of its shareholders may have violated stock-selling rules. The unit
said it would cooperate.
Citadel, one of the world's largest hedge funds with about $26
billion under management, has made it a priority to ramp up
investing in China.
Lingling Wei in Beijing and Yifan Xie in Shanghai contributed to
this article.
Write to Eva Dou at eva.dou@wsj.com
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