Judge Denies Susquehanna Request to Freeze Nearly $100 Million in China Insider-Trading Case
Key Takeaways
- •Judge Arun Subramanian of the U.S. District Court for Southern District of New York denied Susquehanna's request on September 14 to freeze nearly $100 million in funds connected to alleged insider trading before China's May 22 crackdown announcement.
- •Susquehanna filed its lawsuit on June 29 against 100 unnamed defendants, alleging violations of Section 20A of the Securities Exchange Act of 1934 and unjust enrichment, later narrowing its freeze request to 40 individuals, with Citadel Securities joining as an intervenor.
- •The court found Susquehanna provided insufficient evidence that defendants would hide or move assets and had not identified the alleged tipper, any fiduciary duty, or a personal benefit supporting an insider-trading claim.
- •Defendant Zhengfei Li attributed his put-option positions to publicly visible market data, including a put-to-call ratio of roughly 49 to 1 on May 21, and another defendant's messages expressing surprise were found consistent with lacking prior knowledge of the announcement.
- •The earlier order restricting the funds dissolved at 5 p.m. ET on September 16, though the ruling only addresses pre-judgment asset restrictions and does not resolve the underlying insider-trading allegations.
A federal judge in New York has denied Susquehanna Securities and Susquehanna Investment Group’s request to freeze nearly $100 million linked to an alleged insider-trading scheme involving China’s crackdown on cross-border trading platforms.
The ruling was issued on September 14 by Judge Arun Subramanian of the U.S. District Court for the Southern District of New York. Susquehanna filed the lawsuit on June 29 against 100 unnamed defendants, alleging violations of Section 20A of the Securities Exchange Act of 1934 and unjust enrichment. Citadel Securities later joined the case as an intervenor.
The case concerns trading activity before May 22, when China announced a crackdown on cross-border trading platforms. Susquehanna alleged that the defendants bought short-dated put options using material nonpublic information and profited after the announcement triggered a sharp decline in related securities.
A federal judge dealt a setback to Susquehanna's lawsuit claiming it lost tens of millions of dollars to insider trading on a Chinese regulatory crackdown, denying a request to keep the alleged traders’ accounts frozen — Bloomberg (@business) September 15, 2026
The Bloomberg post is also available at https://x.com/business/status/2099936402074898748?ref_src=twsrc%5Etfw.
Court Finds No Imminent Risk to Funds
Susquehanna later narrowed its request for a freeze from 100 defendants to 40. It asked the court to prevent those individuals from transferring or disposing of proceeds held at third-party brokerages.
Judge Subramanian found that Susquehanna had not provided sufficient evidence that the defendants were likely to hide or move their assets before a judgment. The court also noted that accepting Susquehanna’s argument could effectively permit asset freezes in most insider-trading cases without adequate proof.
Susquehanna’s strongest allegation involved one defendant, identified as John Doe 3, who allegedly moved more than $10 million from an account before a freeze took effect. The court said the allegation lacked supporting evidence and that moving money from a trading account does not, by itself, indicate an attempt to avoid a judgment.
The ruling addresses Susquehanna’s request for pre-judgment asset restrictions and does not by itself resolve the underlying insider-trading allegations.
Defendants Cite Public Market Signals
Susquehanna also faced difficulty showing that the defendants likely traded on inside information rather than publicly available market signals.
One defendant, Zhengfei Li, submitted trading records showing two equally sized positions, with half expiring before May 22 and the other half expiring afterward. Li said the trades were based on unusually heavy put-option activity visible in public market data, rather than private information. He said the put-to-call ratio was roughly 49 to 1 on May 21 and that this data led him to enter the positions.
Another defendant submitted messages showing her surprise when the Chinese crackdown became public. The court said those messages were consistent with her not having prior knowledge of the announcement.
The judge said the defendants may have acted on publicly available signals, which would not qualify as nonpublic information for purposes of Susquehanna’s insider-trading claim. The court also noted that Susquehanna had not identified the alleged tipper, the fiduciary duty owed, or any personal benefit received in exchange for passing along the information.
The judge rejected Susquehanna’s alternative request for an asset-attachment order, finding that the company had not demonstrated a likelihood of success on either claim.
An earlier order restricting the funds dissolved at 5 p.m. ET on September 16.
