- Two platforms promised 10% yields, security bureau says
- Jinlu Fund, Dangtian Caifu websites currently inaccessible
Shanghai’s police force has started an investigation into two online platforms after receiving reports from investors that they had been involved in “illegal fundraising,” the city’s Public Security Bureau said.
Jinlu Fund and Dangtian Caifu had promised investors a fixed yield of about 10 percent without obtaining proper legal permission, according to the statement, which was released on the bureau’s official Weibo account Tuesday. The police have taken “restrictive measures” in connection with the case, and will try to recover as much of the assets as possible, the bureau said.
Shanghai Kuailu Investment Group, which announced in April the acquisition of the two platforms, will be urged to “take corporate responsibility,” according to the statement, which didn’t give further details.
The websites of Jinlu Fund, Dangtian Caifu and Shanghai Kuailu were inaccessible and appeared to be down. A WeChat message to a Kuailu public relations person wasn’t returned.
Before the takeover, Jinlu had said on March 31 that it suspended payments on some wealth-management products jointly created with Kuailu, because of a 300 million yuan ($45 million) cash shortage. Kuailu committed at least 3 billion yuan of assets as collateral for the delayed payment at the time.
Chinese authorities have increased their scrutiny of the loosely regulated online-lending industry after a series of defaults and cases of fraud. In December, the country’s biggest Ponzi scheme was exposed after Internet lender Ezubo allegedly defrauded more than 900,000 people out of the equivalent of $7.6 billion. The nation has 1,778 “problematic” online lenders, figures from the China Banking Regulatory Commission show.
The regulator in August imposed limits on lending by peer-to-peer platforms to individuals and companies. The P2P lenders were also barred from taking public deposits or selling wealth-management products, and must appoint qualified banks as custodians and improve information disclosure.