|
 Municipal police said in a statement on their microblog late
Wednesday that they made the arrests on April 5, one day after
receiving reports of investor fraud.
Of the detainees, the police identified only one - Xu Qin, an
executive at Zhongjin's parent company Guotai Investment Holdings
Co.
Xu and some of his associates were detained at an airport as they
prepared to flee the country, according to state media reports.
Company employees told Reuters the others were arrested in their
offices.
On Thursday, a branch of Zhongjin in Shanghai's historic Bund
riverside area had locked its doors. A notice posted on the door
said the company is under investigation and invited investors to
submit complaints to their local police station.
More than 50 people milled about outside, many claiming to be either
Zhongjin investors or employees. Several investors and employees
said they were surprised by the arrests.
"It was very sudden," said an employee who gave her surname as
Zhang, adding that she feared losing the 1 million yuan ($154,595)
she had herself invested with the company.
One man who gave his name as Grandpa Yan said Zhongjin had been
paying out interest on schedule, echoed by others in the crowd. His
complaint was with the police.
"After the arrests, we are now indeed victims. We demand the
(company) officials be freed so we can get our money back. We don't
want our money to be confiscated by the state. It's money earned
with blood for our retirement."
Calls to Zhongjin for comment were not answered. The telephone
number listed on the website of its parent company, Guotai
Investment, appeared to be disconnected.
SIGNS OF STRESS
Defaults and fraud cases in China's shadow banking sector have risen
in past years as the economy has slowed and struggling companies
have been forced to pay higher interest rates to raise cash to stay
afloat.
[to top of second column] |
The Shanghai arrests come two days after the municipal government
launched a crackdown on illegal fundraising as part of a broader
effort to stem financial risks.
The term illegal fundraising is used by regulators to describe
irregular shadow banking activities, including the creation and
sales of financial products through loosely regulated channels.
Zhongjin, founded in 2013, said on its microblog it had made
cumulative total investments of 29.5 billion yuan (£3.2 billion) by
the end of last year. It said most of that principal had already
been returned to investors.
Earlier this month it said one of its latest funds had raised 5.26
billion yuan from over 10,000 investors for investments in
convertible bonds. Last month, the company launched a $1.5 billion
(£1 billion) private equity fund for merger and acquisition
activities.
Zhongjin's parent, Guotai Investment, is a major shareholder in
three Hong Kong-listed companies and claims to have over 100
unlisted subsidiaries.
(Additional reporting by Shanghai Newsroom; Writing by Pete Sweeney;
Editing by John Ruwitch and Ryan Woo)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
