The manager of an AIM-listed China trust - which is held by Fidelity's Anthony Bolton, Baillie Gifford and Henderson - is under investigation by the US regulator.
According to a confidential document seen by Reuters, the SEC has issued subpoenas to several investment firms that have done business with Vision Capital Advisors, the New York-based hedge fund.
Vision Capital manages the $100m AIM-listed Vision Opportunity China Fund Ltd, which is almost 48% owned by four UK groups.
City of London Investment Management owns 21.45% of the vehicle, followed by Baillie Gifford at 15.55%, Anthony Bolton's Fidelity China Special Situations at 5.45% and Henderson manager Paul Craig at 5.3%.
The hedge manager has confirmed it is subject to an SEC inquiry, but has not outlined the nature of the probe. Citing people familiar with Vision, including investors and former employees, Reuters said regulators might be examining the methodology the hedge fund has used to put valuations on the equity stakes it has taken in hundreds of struggling small-cap companies.
Vision Opportunity China, which was incorporated in Guernsey in November 2007, makes direct investments in small-to-medium enterprises.
The trust's shares plummeted almost 20% from $1.81 to $1.45 following the Reuters report late last month. It has since rebounded to $1.64. Vision Opportunity China says the NAV of the trust stood at $2.1 per share on 30 September.
Baillie Gifford increased its stake from 14% to 15.55% on 30 September, more than a week after news of the probe surfaced.
Vision is led by Adam Benowitz and Randolph "Randy" Cohen. Reuters says they chose the name Vision Capital because they each suffer from a significant visual impairment.
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