Hedge Fund Researchers Arrested In China

Researchers for at least two American hedge funds have been arrested or harassed by Chinese authorities.

Both Absaroka Capital Management and EOS Holdings have had employees persecuted, the Pittsburgh Tribune-Review reports. The treatment has included death threats from both thugs and police as well as arrests: Three EOS employees were detained for five days, and two remain under travel restrictions. The fate of the Absaroka employees is unclear.

Word of the arrests comes as China prepares to open its markets to foreign hedge funds. But the country may not be ready to welcome short-sellers or their researchers seeking evidence of fraud at Chinese companies.

According to New York Global, which promotes Chinese stocks, "several individuals who had been paid by identified short-seller hedge funds to supply fabricated data" on Chinese companies were arrested. China's Ministry of State Security is involved, the company said.