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"People Are Worried" - Chinese Authorities Arrest 'King Of IPOs' & 'Hedge Fund Brother No. 1'
The arrests or investigations targeting the finance industry in the aftermath of China’s summer market crash have intensified in recent weeks according to Bloomberg, creating a climate of fear among China’s finance firms and chilling their investment strategies. As one professor of Chinese economy noted, "some in the political leadership sought to find scapegoats to blame" for the market crash which along with massive intervention "created uncertainty and anxiety that can only undermine the effort to make these markets work better."
The high-drama highway arrest of a prominent hedge fund manager. Seizures of computers and phones at Chinese mutual funds. The investigations of the president of Citic Securities Co. and at least six other employees. Now, add the probe of China’s former gatekeeper of the IPO process himself.
About a third of China’s futures-focused hedge funds had to stop trading as regulators restricted practices such as short-selling, but as Bloomberg details,
Howbuy Investment Management Co. in September said it stopped providing data on premature fund liquidations because the information was too sensitive. The Shanghai-based fund research firm had previously said almost 1,300 hedge funds closed this year amid the stock rout.
The authorities’ goal was to root out practices such as insider trading as part of China’s anti-corruption campaign, and a desire by "some in the political leadership to find scapegoats to blame" for the market crash, according to Barry Naughton, a professor of Chinese economy at the University of California in San Diego.
“Together these are creating uncertainty and anxiety that can only undermine the effort to make these markets work better,” he said by e-mail.
The government’s response to the market crash was intervention: state-directed purchases of shares, a ban on initial public offerings and restrictions on previously allowed practices, such as short selling and trading in stock-index futures. Next, high-ranking industry figures came under scrutiny as officials investigated trading strategies, decried “malicious short sellers” and vowed to “purify” the market.
Policy makers say “now we’re innovating, so you can all come in -- using high-frequency trading, hedging, whatever -- to play in our markets,” Gao Xiqing, a former vice chairman of the China Securities Regulatory Commission, told a forum in Beijing on Nov. 6. “A few days later, you say no, the rules we made are not right, there are problems with your trading, and we’re putting you in jail for a while first.”
At least 16 people have been arrested, are being investigated or have been taken away from their job duties to assist authorities, according to statements and announcements compiled by Bloomberg News.
In the latest probe announced last week, Yao Gang, a vice chairman at the CSRC, is under investigation for “alleged serious disciplinary violations,” the Communist Party’s Central Commission for Discipline Inspection said. Known as China’s "King of IPOs," he supervised China’s initial public offerings until earlier this year, when he changed to approve bonds and futures, according to Caixin magazine. He joins two other CSRC officials being investigated, one of whom, Zhang Yujun, was formerly the general manager of the Shanghai and Shenzhen stock exchanges.
The securities regulator carried out unannounced inspections of several Chinese investment firms including Harvest Fund Management earlier this month, taking away hard drives and mobile phones, according to people familiar with the seizures. Police in Shanghai also confiscated computers and froze $1 billion of shares in listed companies connected to Xu Xiang, the manager of Zexi Investment known as “hedge fund brother No. 1,” who was arrested Nov. 1 on a highway between Shanghai and Ningbo.
Among Xu’s fellow money managers who performed well this year, anxiety has been palpable following his arrest, according to hedge fund manager Lu Weidong, chairman of Xinhong Investment based in China’s southern city of Dongguan. Lu’s Fuguo No. 1 fund was the best-performer among the 236 Chinese multi-strategy hedge funds from June to August, according to Shenzhen Rongzhi Investment Consultant Co., which tracks the data.
It isn’t uncommon for Chinese money managers to trade on unpublished information, according to Lu. Everybody that ever traded on such tips would “restrain themselves a bit” going forward, Lu said by phone.
“People are worried,” he said.
"The extent of this round of clampdown in the financial industry has surpassed everybody’s expectations," Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong.said. "Over the longer term, the clampdown on corruption in the financial industry will level the playing field in the market for smaller investors."
However, the arrests or investigations targeting the finance industry are creating a climate of fear among China’s finance firms and chilling their investment strategies.
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It' starts with one. Ipo flipping is back. Playing the calendar in Chinese. We always export our knowledge. Heck. They are arresting regulators there. Should do same here. They are complicite.
http://hedgeaccordingly.com/2015/11/top-china-market-regulator-yao-gang-...
This is overall bullish for stawks right?
This is what a government should be doing in the wake of a financial crisis. Do you realize what this means? The US government is more corrupt than the Chinese.
Yes, Comrade... we will allow some Capitalism...
But only OUR version of Capitalism.
It's not as if Financial people's lives really matter.
and only when the market is going up. No puts or short selling allowed, or you are a corrupt yankee round eye that needs to be re-educated.
There was no crises, it was just the market going down because things are clearly overvalued. And where was all this intervention when the market was going up?
Someone in government has decided what the value of something is, but the market does not agree with this price, hence the intervention is needed to "correct" the market.
"About a third of China’s futures-focused hedge funds had to stop trading as regulators restricted practices such as short-selling,"...wait, wut?
Ahhh yes, "the people" can only be "allowed" to profit when markets rise.
This is one time that I agree with Jeff Immelt that we should have a government more like the Chinese government here in the US. If we did, Corzine, Hitlery and 1/2 of Congress would most likely be pushing up daisies.
When you look at the fact that interest rates, ratings, commodity prices, and currency exchange rates were 'compromised' between London and New York the Chinese would probably hope to prevent that sort of thing, or at least contain it.
The manipulations led to a Global Financial Crisis which is still with us after 8 years and will be with us for a very long time. Just think Argentina, Greece, Ukraine, Japan's recessions, and the ME war. There is not enough meat in the world at the moment to see where improvements or a cure could come from. If the Chinese can prevent such a deep crisis as the 2008 crisis emenating from Wall Street, that'll be worth doing. Corruption, gypping etc is everywhere; I experienced it during the Kohl Regime in Germany. How a country deals with it, that matters. With Macao's gambling turnover reducing significantly after the first anti-corruption actions, there seems to be an effect.
You won't get a different sort of government in America for a long, long time.
Chinese oligarchs should probably flee as quickly as possible. This is only the beginning.
Bloomberg...a wallstreet quasi governmental rag. They would be going nuts if even 1 banker or wall street cunt were arrested in the US.
That will teach yet another group of Chineese "traders" to sell when the Chicoms say "hold". Screw HFT trading and algo's, the Chicoms just put a bullet in your head if you sell. That will ensure their market continues to go up. Long China, short on Chineese Day-trader training academies...
Definitely bullish!
"...undermine the effort to make these markets work better" LOL for Whom ? The imbeciles under investigations with more in the pipeline did not read that the rules of the games have changed. So they want you to believe that they have been "doing God's works. It is the same deformed/rigged market with a different hue.
Fiat is going to take a beating. It's a race to the bottom.
It's always good to remember that the Chinese were the first to introduce paper currency.
It was an instant hit with the people who embraced the fiat currency.
This was probably due to the fact that refusal to accept the paper money was punishable by death.
The grim fact is the US is becoming more like China - a single Party state. That Party is Corporate power.
If you run up against the Deep State and the big interests they work for you are going to get it - just like these Chinese guys.
China runs (many) Party "investigation" units which are beyond the standard audit and ministry regulatory function. They are not the PAP, but they go where they want. They are not the PLA, but people snap to attention when they need to be driven somewhere or hop a plane.
A humble Gestapo built upon 2,500 years of Ruism.
What do you got - 20 weeks at Quantico?
The US is becoming this - an army of unaccountable Soviet zampolits - whom every hates yet are "necessary" to go after troublemakers.
Whatever that means this week.
Policies that would be considered insane 10 years ago are now the norm.
Just hope the Emperor is far away.
One need only look at what happens to the US security complex whistle-blowers to know the risks.
Likewise, if you are part of a criminal banking cartel you will be left alone in a basement with the American public's head in a vice while the Feds guard the door upstairs.
The post WW2 American economy as a great trip to Disneyland that your childhood will always remember ...
... in the twilight's last gleaming.
When communism meets markets. Insider information makes China go round.
You think this can only happen in China?
Soon will be available in a town near you.
Doing stocks seems to be a dangerous business in China, better stay away.
If Article was written By a Banker I can understand,
It says, "people are worried". I say "Bankers are worried".
If Article was written By a Banker I can understand,
It says, "people are worried". I say "Bankers are worried".
year of the scapegoat
The financial types were hoping to move to China when they have finished strip mining the US.
Shock, horror, in China financial types are not above the law.
Where will they go?
"Lu’s Fuguo No. 1 fund was the best-performer among the 236 Chinese multi-strategy hedge funds from June to August"
Haha, as if the best preforming of 236 hegde funds could ever be clean in the first place. This is awsome, the people want more.
Everyone talks of the Chinese as communists but in reality they are National Socialists converting from communism. They and we are now almost exactly the same except we are coming to National Socialism from a democracy/republic.
The end result is the same.
They are a bit more advanced than we are in dealing with issues such as financial corruption but not to worry. Once the US markets do their nose dive off the deep end, we too may quickly catch up in jailing the bankers and ponzi hucksters..... but then again we may not.
Despite $100's billions in fraud in the mortgage meltdown not a single key player has gone to jail. The only major criminal in jail is Bernie and that is because he was not as connected as he should be. I mean take a lesson from Corzine.
Because we may not be able to jail the criminals we may suffer a severe and long period of civil war in order to do a reset where hopefully those who have gamed the system will be deposed. We see the same exact events occurring in modern history in the French Revolution and the Russian Revolution. Where as the NAZI takeover was accomplished with relatively little bloodshed our reset or takeover will be very bloody based on the response to the 2008 warning shot(s).
Obama bin Laden has made sure that race will play a key part in our upcoming meltdown as well.
Don't short the market. If the PPT can't crush you with expiration week market ramps, they will arrest you. Once the governments started buying stocks it was innevitable that any action taken to profit from stocks going down would be come illegal. Coming to USA next (ackerman).