Chinese Investors Protest After $6.7 Billion Frozen, Caixin Says

More than 100 people gathered Monday in front of the China’s securities regulator to demand a probe into rare-metals-linked products they claim to have frozen 43 billion yuan ($6.7 billion) in invested funds, Caixin reported.

Demonstrators stood outside the China Securities Regulatory Commission holding signs that accused Yunnan province-based Fanya Metal Exchange of cheating them out of their money, “trampling the law,” and “destroying life savings,” financial magazine Caixin reported today.

Fanya in July stopped investors from cashing out of investment products that promised a fixed rate of return of 13.68 percent and guaranteed principal, Caixin said, citing unidentified investors. The exchange has faced liquidity problems from earlier this year after a drop in rare metals prices. Indium, which was cited in the report, has fallen almost 60 percent in the past year, Metal Bulletin data shows.

This isn’t the first time irate investors in China have taken to the streets. In April 2014, investors demanding money back from a high-yield product linked to a troubled coal miner confronted police in front of a China Construction Bank Corp. branch in the northern province of Shanxi province.

A drop of commodity prices has placed pressure on many commodities-linked funds, triggering heavy losses and some closures including funds of Black River Asset Management and Armajaro Asset Management.

Liquidity Problems

A person answering the phone at the Fanya exchange’s Beijing office said the company couldn’t immediately comment. The CSRC didn’t respond to a faxed request for comment.

Last month, Fanya Chairman Shan Jiuliang was attacked and forced to a police station by unhappy investors, according to a report in Futures Daily, an affiliate of the Communist Party-run People’s Daily. The company confirmed the incident in a statement on its website, adding that its trust business that sells investment products had been facing liquidity problems from April because of heavy redemptions.

Some Fanya executives have been barred from leaving the country, Caixin said, without saying where it obtained the information. Fanya will hold a meeting on its trust business debt restructuring Sept. 28, according to the report.

— With assistance by Haixing Jin

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