"The day that (stocks) turned around, it was the day that the public security ministry said they would be investigating," he said. "These are the guys who throw you in a hole for a long time."
Even if the Chinese authorities end up prosecuting only a few traders, doing so would likely instill enough fear to make every trader toe the line, Chovanec said. That effect is bolstered by nebulous charges like malicious selling—"the vaguer definition, the broader the message," he said.
"The fact is you're going to get arrested if they want to arrest you," Chovanec said. "The message is to everyone else: 'Watch your step.'"
But more probes may be on their way, as Chinese stocks continue to slide.
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"This has been the pattern throughout this stock market saga: That the government has come in with heavy boots on several occasions, trying to control the market," Jonathan Fenby, China director at Trusted Sources, told CNBC on Tuesday.
"We've had about 200 people who've been taken in for questioning or helping the authorities with the inquiries ... over the stock market gyrations over the last few weeks," he added. "Nobody quite knows what all this is about."
One such individual apparently is the China head of British hedge fund Man Group, Li Yifei, as a Monday report from Bloomberg suggested that she had been taken into custody by the local police as part of a probe into markets. Her husband, however, denied that claim to the Financial Times, simply saying that she attended a meeting with authorities. A spokeswoman for Man Group declined to comment.
The crackdown on those potentially moving markets lower also extends to journalists. On Monday, state television showed a confession from Wang Xiaolu, a reporter for financial magazine Caijing. In the broadcast, Wang admitted to a false report that "caused such a great damage to the country and stock investors."
"I shouldn't have sought to make a big splash just for the sake of sensationalism," he said on China Central Television.
Caijing said last week that its reporter had been detained for a story saying China's market regulator was considering ending interventions aimed at stabilizing share prices. That report was immediately denied, but the official Xinhua News Agency reported that Wang's story caused "abnormal fluctuations" in the market.
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"A statement aired by a state-run broadcaster, before the 'suspect' has ever appeared in court, shows the lengths to which the Xi Jinping government will go to intimidate journalists," Bob Dietz, Asia program coordinator at the Committee to Protect Journalists, said in a statement.