天津富通鑫茂科技股份有限公司
Tianjin Futong Xinmao Science and Technology Co., Ltd.
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Cases of “Protecting Investors • Know Rules, Identify Risks”(17)

Insulating Illegal Investment Advice and Establish a Rational Investment Philosophy

Source: China Securities Regulatory Commission www.csrc.gov.cn


The Securities Law, the Regulations on the Supervision and Administration of Securities Companies and other relevant laws and regulations clearly stipulate the obligations that consulting organizations and consultants should perform in securities and futures investment consulting business and the professional standards that must be observed. However, there are still many lawbreakers present to be legal investment advisory agencies and professional wealth management staff to provide illegal securities investment consultation by claiming to provide accurate investment advice and help investors to obtain high investment return.

Wang, legal representative of an investment management company in Shanghai, conducted securities investment consulting business to the public without the approval of the competent national authority even if he knew that the company was not qualified to engage in securities investment consulting business. During the period, the company charge consulting fees of approximately RMB 90,000, and honesty operation fees and consulting fees of RMB 760,000. Wang’s behavior constituted an illegal business operation, violating Article 225 of the Criminal Law of the People’s Republic of China, and was finally sentenced to two years in prison by the Zhabei District People’s Court of Shanghai, suspended for two years, fined RMB 80,000, and confiscated all illegal gains.

In another illegal investment consultation case, after being dismissed by an investment management group in Beijing, Wang claimed himself to be a salesman in a money-management company in the guard room of a primary school in Shijingshan District, Beijing and other places from February 2016 to September 2016. During this period, he defrauded Guo of RMB340,000 through signing a false lending consultation and service agreement, and he returned to Guo RMB52,000 in the form of rebates. The People’s Court of Shijingshan District of Beijing held that Wang was aimed at illegal possession and defrauded other persons during the process of signing and performing the contract. The amount involved was huge and constituted a crime of contract deception, and Wang were sentenced to a four-year and three-month imprisonment and returned over RMB280,000 to Guo and fined RMB5,000 ultimately in accordance with Article 224 of the Criminal Law of the People’s Republic of China. 

Article 122 of China's Securities Law stipulates: “No unit or individual shall operate a securities business without the approval of the securities regulatory authority under the State Council.” In the two cases above, the criminals fabricated so-called professional investment consultant qualification, lured investors by promise of high gain, and then defraud investors of their properties through false transactions. Therefore, investors must keep vigilant in investment consultation and improve awareness of risk prevention.

The first, investors must keep eyes open and carefully check whether the relevant institutions are qualified to conduct securities investment consulting business approved by the China Securities Regulatory Commission. Investors may check the list of legal institutions and personnel on the website of China Securities Industry Association, and carefully check whether the business licensed includes “securities investment consulting”. The China Securities Industry Association website provides a public information column for illegal counterfeiting agencies, which investors may check.

The second is to be highly vigilant and never send money to a personal account provided by such an agency. Legal securities investment advisory agencies generally charge consulting service fees through company-specific collection accounts. Investors should be extra cautious for securities advisory activities that require money to be credited to personal bank accounts. Investors may consult with securities investment companies and report to the relevant regulatory authorities in a timely manner in case of an abnormal circumstance.

The third is to make rational investments, improve risk prevention awareness and self-protection ability. Investors should consciously stay away from the illegal investment advisory agencies luring investors with high returns, give up the thought of being rich overnight, and never be blinded by the false information about high income and high return, and always maintain a rational investment mentality.



This article is extracted from the “Risk warning and prevention for investors" - Case of “Protecting Investor • Knowing Rules & Identifying Risks” - Insulating Illegal Investment Advice and Establish a Rational Investment Philosophy on the official website of the China Securities Regulatory Commission.

Copyright:Tianjin Futong Xinmao Science and Technology Co., Ltd.  Jin ICP Record No. 13003376-1

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