China’s securities watchdog is investigating hedge fund Zhejiang Ruifengda Asset Management Co. for suspected illegal activities. The fund has allegedly failed to pay investors seeking redemptions, and its controlling shareholder is missing. The China Securities Regulatory Commission (CSRC) is taking the case seriously and has instructed relevant agencies to inspect the fund’s operations. Zhejiang Ruifengda, which manages over CNY2bn (USD277m), has halted repayments to investors. Economic crime investigators in Shanghai have sealed off the company’s office. Many investors, including securities firms, have reported the case to local police. The investigation comes as China tightens scrutiny of hedge funds with new regulations set to take effect on August 1, aimed at raising asset thresholds and curbing leverage and derivatives use.