US hedge fund says China account suspended amid market probe

China’s Shenzhen stock exchange has “suspended” a trading account used by a unit of Citadel, the US-based hedge fund said Monday, after authorities restricted several accounts in the wake of a market rout. The suspended account was trading the firm’s own money, an anonymous source familiar with the matter told the Wall Street Journal (paywall).

“We continue to otherwise operate normally from our offices, and we continue to comply with all local laws and regulations”, a Citadel spokesman said in a statement.

This makes Guosen-and Citadel-one of the first foreign casualties of the Chinese government probe of “malicious short selling” of stocks and indexes, which state-run media and a state-owned enterprise head have blamed on “foreign forces.”

Citadel, which is helmed by billionaire Ken Griffin, has $26 billion worth of assets under management.

The CSRC announced on Friday it had initiated an investigation into automated trading and has frozen activity in 24 stock accounts suspected of unduly influencing stock prices.

Restrictions had been applied to at least 34 accounts in total by Monday according to statements by the two exchanges, 14 in Shanghai and 20 in Shenzhen.

On its website, the CSRC noted it is investigating over 50 suspected securities violations and false promises to sell down share holdings during the recent Chinese stock markets crashes.

The account in question is managed by a Chinese firm, it said. Although the regulator didn’t name any of the owners of the restricted stock accounts, Citadel admitted over the weekend that one of their accounts was among those closed. Of particular concern is practice known as “spoofing”, whereby trading programsplace buy or sell orders large enough to move prices, and cancel those orders before they are executed.

CITIC insisted it will support the government’s regulatory measures to stabilize the stock market.

Regardless of who is to blame, the short-selling ban hasn’t helped boost the stock markets.