Citadel Investment Group is feeling the heat from Chinese authorities who appear to be on a campaign to demonize U.S. investors suspected of shorting the stock market.
On Friday, the Nikkei Asian Review reported that the China Securities Regulatory Commission had suspended 24 accounts for three months from trading on the Shanghai and Shenzen exchanges including Citadel and local Chinese accounts. Citadel confirmed that it had been suspended from trading in Shenzen in a statement to the Wall Street Journal (paywall):
“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 in a statement.
The tiff doesn’t end there for Citadel. George Chen, managing editor of the international edition for the South China Morning Post, tweeted that a government-backed publication called ThePaper.cn was implying that Citadel advisor and former Federal Reserve Chairman Ben Bernanke somehow knew that the high-frequency trading firm was shorting the market.
Wow! Chinese media now try to hint US hedge fund Citadel advisor ex-Fed chair @benbernanke may know it shorting China pic.twitter.com/AbFSsaUIiM
— George Chen (@george_chen) August 2, 2015
Other media are chiming in, insinuating Bernanke knows about the Citadel trading, he added.
The government has been under intense pressure to slow the stock market rout that is now more than a month old and has turned to blaming anyonen it deems to be nefarious market players. Reuters has reported that the CSRC is hunting down so-called market manipulators in Hong Kong and Singapore:
China is pressing foreign and Chinese-owned brokerages in Hong Kong and Singapore to hand over stock trading records, sources said, extending its pursuit of “malicious” short sellers of Chinese stocks to overseas jurisdictions.
The Reuters report also noted that it was “highly unusual for the CSRC to seek information from offshore and international brokers directly.”
Photo: Paul Elledge