【“Investor Protection·Clarify the Rules and Know the Risks” Case – The “Dangerous Game” of Non-Qualified Investors】

Private investment funds (hereinafter referred to as private funds) refer to investment funds established within the territory of the People's Republic of China that raise funds from investors in a non-public manner. The organizational forms of private equity funds are contractual, corporate and partnership.

In recent years, my country's private equity fund industry has developed vigorously and has become an important force supporting the development of the multi-level capital market. However, risk events such as illegal fundraising, redemption crisis, illegal publicity, and violation of the investor suitability system have also begun to emerge. Among them, in the name of financial innovation, cases of breaking the bottom line of qualified investors in disguised form have emerged one after another. Since the "Interim Measures for the Supervision and Administration of Private Equity Funds" (hereinafter referred to as the "Private Equity Measures") of the China Securities Regulatory Commission clearly stipulates the standards for qualified investors in private equity funds, that is, they have the corresponding risk tolerance and risk tolerance, and the amount invested in a single private equity fund. Not less than 1 million yuan, etc. In order to avoid regulatory requirements, some companies use various methods to try to break through the relevant standards of qualified investors.

Take the case of investor Wang as an example. In 2014, a fund company sold limited partnership fund products to Wang, and Wang paid only 300,000 yuan, and the amount invested in a single private equity fund was less than 1 million yuan. The fund company's behavior of raising funds from non-qualified investors violated Article 11 of the "Private Equity Measures" "Private Funds shall raise funds from qualified investors". The CSRC decided to issue a warning and impose a maximum fine of 30,000 yuan.

There is also a typical case of circumventing the standard of qualified investors through the concept of "split transfer of income rights" through private placement products. "XX Treasure" is an Internet financial platform that provides so-called "transfer of income rights" services through its website and APP. The specific model is that Company C, the operator of "XX Treasure", through its wholly-owned holding Company D, as a qualified investor, first purchases relevant private equity products; , transferred to registered users through "XX treasure", and registered users can also transfer the right to benefit to other registered users through "XX treasure". The starting point of the investment amount set by "XX Treasure" is 1,000 yuan (fixed income) and 10,000 yuan (equity). In addition, according to the "Profit Transfer Agreement" signed by Company D and the investor, the risks and benefits of the private placement products are borne by the transferee, the investor, after the transfer. Later, a securities regulatory bureau determined that Company C violated the provisions of the Private Equity Measures, which constituted illegal acts such as conducting private equity business to non-qualified investors, illegally transferring shares of private equity products such as private equity funds, and the number of investors in a single private equity fund exceeding the legal limit. The company, its legal representative and relevant management personnel have taken administrative supervision measures in accordance with the law. Many investors involved in this case also suffered losses to varying degrees, and the case also triggered a number of investor complaints.

Private fund products have high-risk attributes, and investors with certain risk identification ability and ability to bear can only buy them. In the above cases, the relevant investors took risks beyond their own capabilities. For example, Wang only invested 300,000 yuan to purchase a private equity fund product requiring an investment threshold of 1 million yuan; in case 2, after the private equity product was split and transferred, all risks were transferred to the investor. It can be said that the above actions have lowered the threshold for qualified investors, allowing some investors with weaker risk identification and risk tolerance to take risks that they should not have assumed.

Through the above cases, investors are reminded to pay attention to the following issues:

1. do what you can. Private equity fund investment has the characteristics of high risk, and requires high risk identification ability and risk tolerance ability of investors. The "Private Equity Measures" also clearly stipulates the requirements for qualified investors in private equity funds. In addition to the investment amount of a single private equity fund not less than 1 million yuan, the unit's net assets should not be less than 10 million yuan, and the personal financial assets should not be less than 3 million yuan. RMB or the average annual personal income of not less than RMB 500,000 in the last three years. Investors should proceed from their own reality, do what they can, and judge whether they can invest in private equity fund products according to the standards of qualified investors of private equity funds. On the premise of meeting the standards of qualified investors, they can choose products that match their risk tolerance. .

2. to find out the details. Only private fund managers legally registered with the AMAC can raise funds from qualified investors. Investors are advised to check the AMAC website (www.amac.org.cn) before purchasing private placement products. Whether the institution has been registered with the Fund Industry Association, it should not be purchased through illegal channels. At the same time, you can also learn more about the private fund managers' past performance, market reputation, and integrity standards.

3. look carefully at the contract. The fund contract is an important document that stipulates the rights and obligations between investors and private equity fund managers. Investors are advised to pay attention to whether the contract complies with the "Guidelines for Private Investment Fund Contracts" issued by the AMAC when reviewing the contract, whether the rights and obligations stipulated in the contract are reasonable, whether the contract is complete, whether there are any abnormal situations such as missing pages and pages, etc. Read the terms carefully, and ask the fund manager to explain or explain the concepts and vague expressions that you do not understand, and do not be fooled or deceived by various exaggerations and false propaganda. For contracts in multiple copies, it should also be checked whether the content of each contract is completely consistent. In addition, special attention should be paid to illegal fundraising similar to the case of C Company in Case 2, which is disguised as "financial innovation". When investors purchase financial products through the Internet platform, they should carefully read the relevant product introductions to understand whose products they are buying, who they signed with, where the funds are allocated and the specific investment direction. If any abnormality is found, the fund industry association or the regulatory department should be consulted in time.

4. continue to pay attention. After subscribing for private equity fund products, investors should continue to pay attention to the investment and operation of private equity fund products, and require private equity fund managers to perform information disclosure obligations as agreed. If investors find that the manager has lost contact, the fund property has been embezzled or misappropriated, or the fund has major risks, etc., they should report to the securities regulatory bureau or fund industry association where the private fund manager is registered in a timely manner; if the private fund manager is found to be suspected of fraud, illegal If there are criminal clues such as fundraising, it is necessary to report the case to the public security and judicial organs in a timely manner.

5. Regularly learn private equity knowledge. The development of Internet technology has made financial services continue to innovate. Investors should also regularly learn relevant knowledge when participating in high-risk investment businesses such as private equity funds, such as browsing the websites of regulatory authorities or fund industry associations, and reading newspapers and magazines. Carefully identify relevant businesses or products, and don’t be deceived by so-called innovative products and super-high returns. Remember that “you are interested in other people’s income, but others care about your principal.”