Argentina
Argentina has been forced into second debt default in 13 years

Argentina's market watchdog has announced an investigation into alleged unlawful speculation by holdout funds, which have now litigated the country into its second debt default in 13 years.

Argentina's Securities Commission chief Alejandro Vanoli has asked US regulatory authorities for information regarding trades of Argentina's sovereign debt and credit default swaps (CDS) - derivatives used to insure against default, Reuters reports.

The watchdog will check whether the so-called "vulture funds", who rejected Argentina's bond restructuring, held or traded CDS while they took part in negotiations with Argentina.

"The use of insider information, which would be the case here, and market manipulation are crimes in Argentina, they are crimes in the United States, and they imply economic sanctions and eventually criminal sanctions," Vanoli was quoted as saying by Reuters.

Earlier, US District Judge Thomas Griesa declined Argentina's plea to remove court-appointed mediator, Daniel Pollack, whom the country labelled as a "spokesman of the vulture funds"

"He (Pollack) has been even-handed in relationship to the parties. There has been no bias in any degree," Griesa said.

On 1 August, Argentina fell into its second default in 13 years after its attempt to make a settlement with holdout funds failed.

The country has been engaged in a long legal battle with hedge funds led by Elliott Management and Aurelius, which refused to take part in the country's debt restructuring.

In a major blow to the government, Griesa earlier gave a ruling that bars Argentina from paying the holders of its restructured debt unless it pays the hedge funds. He has also blocked Argentina's coupon payment to restructured bondholders through a New York bank.

The default comes as a major blow for the Argentine economy, which is already in recession. It would damage its reputation further in the international capital market, as it looks to global financiers to repair its economy.

Read the dispute timeline here.