Chicago-based hedge fund Citadel has had one of its trading accounts suspended in Shanghai as the Chinese government cracks down on so-called “abnormal transactions” in its crashing stock markets.
“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,” Citadel wrote in an email to the New York Times.
The Shanghai Stock Exchange released a statement saying Guosen’s account was suspended along with three others “to maintain order in the market and protect investors’ interests.”
Citadel, which is helmed by billionaire Ken Griffin, has $US26 billion worth of assets under management. Guosen Futures is one of its brokerage units.
Chinese stock indices took a nose dive on June 12th, and since then Chinese regulators have been taking extraordinary measures to stop the bleeding. They have thrown money at the problem, suspended IPOs and new share issues, and promised to go after “malicious” market participants.
On Friday the Chinese government announced it would go after any market participants suspected of “spoofing.”
Spoofing is pretty simple. It is where a trader puts on a huge order, watches the market react, and then cancels the order while also taking advantage of the market reaction their order created.