The Shanghai Futures Exchange (SHFE) has determined that the pre-arranged matched trading operations conducted by Luan Kun constitute a violation, disrupting market order. Legal analysis indicates that such "matched trading" behavior legally constitutes a classic form of futures market manipulation. Furthermore, as it involves the purpose of "transferring funds," it may carry the nature of tunneling and could trigger civil liability for damages. The incident exposes significant loopholes in personnel control and transaction monitoring within some private fund institutions.

On May 11, the Shanghai Futures Exchange issued two consecutive disciplinary announcements, imposing sanctions and fines on the Tongkun Yingxiang No.1 Private Securities Investment Fund, the Tongkun Jianxin No.1 Private Securities Investment Fund, and their fund manager Luan Kun. This serves as a stark warning for compliance and risk control in the private futures industry.

The announcements reveal that on September 29, 2025, Luan Kun operated the accounts of the Tongkun Jianxin No.1 private fund and a client's account to execute pre-arranged matched trades and transfer funds on gold options contracts, thereby disrupting market order.

The SHFE deemed these actions to constitute violations as stipulated in its "Measures for Handling Violations." Accordingly, it decided to issue a reprimand and order corrective actions against Luan Kun and the Tongkun Jianxin No.1 private fund. A fine of 10,000 yuan was imposed on the fund, and a fine of 15,000 yuan was imposed on Luan Kun. The fines are to be paid in full to a designated SHFE account within five trading days from the effective date of the violation decision.

On the same day, Luan Kun also operated the Tongkun Yingxiang No.1 account and another individual's account to engage in matched trading on gold options contracts, similarly disrupting market order.

The SHFE also pointed out that this behavior constituted a violation. It decided to issue a reprimand and order corrective actions against Luan Kun and the Tongkun Yingxiang No.1 private fund. A fine of 30,000 yuan was imposed on the fund, and a fine of 60,000 yuan was imposed on Luan Kun, payable under the same terms.

Public filing information shows that both involved funds are affiliated with Shanghai Tongkun Investment Management Co., Ltd., and were newly established and filed in 2025. The Tongkun Jianxin No.1 private fund was established on February 17, 2025, filed the next day, and is currently in "early liquidation" status. The Tongkun Yingxiang No.1 private fund was established on March 25, 2025, filed the next day, and is currently "in operation."

Regarding this violation, the SHFE emphasized in its announcement that relevant futures companies should strengthen client compliance education, enhance the monitoring and management of online trading, and prevent the recurrence of similar incidents.

"Luan Kun's 'pre-arranged matched trading' behavior legally constitutes a classic form of futures market manipulation (matched trading), which is expressly prohibited by the 'Futures and Derivatives Law' and the 'Criminal Law'," said Bai Yaohua, a lawyer and senior partner at Beijing DeHeng Law Offices (Shanghai). He noted that while this behavior and tunneling differ in purpose and the legal interests infringed upon, they can overlap in practice.

The industry needs to clearly distinguish the core boundaries between market manipulation and tunneling. Bai Yaohua analyzed that the core harm of market manipulation is distorting the normal supply-demand relationship and price discovery mechanism by artificially creating false trading prices or volumes, thereby infringing upon the open, fair, and just trading order of the futures market. Tunneling, on the other hand, involves improperly transferring benefits that rightfully belong to the fund or institution to specific parties by leveraging position or information advantages, directly harming investors' property rights and violating the fiduciary duty of private fund managers. Relevant regulations prohibit private fund managers from "using fund assets or their position to seek benefits for themselves or persons other than investors, engaging in tunneling."

"It is noteworthy that in practice, the two behaviors may be intertwined," Bai Yaohua pointed out. For example, a fund manager conducting matched trades by buying high and selling low to transfer fund assets to accounts they control achieves both market manipulation (creating false trades) and tunneling (transferring fund assets). In this incident, the SHFE announcement explicitly mentioned that the involved trades had the purpose of "transferring funds," which inherently carries the nature of tunneling. Therefore, matched trading is often used as a means to execute tunneling. If such actions cause losses to fund assets, they may also violate the provisions of the "Interim Measures for the Supervision and Administration of Privately Offered Investment Funds" prohibiting tunneling and could trigger civil liability for damages to investors.

The occurrence of two similar violations by the same fund manager on the same day fully exposes significant deficiencies in personnel control, transaction monitoring, and compliance culture within some private futures institutions, sounding a loud alarm for compliance across the entire industry.

Regarding industry rectification directions, Bai Yaohua suggested that institutions should subsequently focus on strengthening account and trading behavior monitoring, implementing real-name account registration and checks on actual control relationships, enhancing real-time monitoring for abnormal transactions, and improving the documentation and review mechanisms for investment instructions. Simultaneously, institutions need to健全 internal control and checks-and-balances mechanisms, strengthen the separation of front, middle, and back-office duties,加强 key personnel management, and establish effective conflict-of-interest prevention mechanisms. Furthermore, institutions must elevate the compliance awareness of all staff, with management必须切实履行 their management responsibilities to ensure the effective operation of the compliance and risk control system.