Chinese Police Probe Sina’s Wealth Partner for FraudBloomberg News
Sina Corp., parent of China’s largest microblogging service, said police are investigating one of its wealth product partners for alleged embezzlement.
Police in the southern city of Shenzhen are looking into claims that Zhonghuizaixian.com, a peer-to-peer online lending platform, misappropriated bankers’ acceptances that backed a wealth product Sina helped sell, Sina’s Weicaifu wealth unit said in a statement yesterday. Zhonghuizaixian.com said Dec. 19 it will cooperate with the police and that it received claims from 120 investors demanding as much as 55 million yuan ($8.8 million).
Peer-to-peer lending has taken off in China since 2011 as traditional methods of private lending among family and acquaintances, part of the country’s shadow-banking system, move online. About 800 peer-to-peer lending websites emerged in China just in 2013 with outstanding loans of 26.8 billion yuan ($4.3 billion), according to Xinhua News Agency.
“Cases of online lending platforms running into trouble won’t have any systemic impact on the financial system” because they don’t create money like banks, Xu Gao, an economist at Everbright Securities Co. in Beijing, said by phone. “Having said that, there have been cases before, and they should serve as a warning to us as these platforms are relatively new in China.”
Chinese authorities may issue guidelines for Internet finance soon, China Business News reported in October. The China Banking Regulatory Commission will study rules on online peer-to-peer lending, the regulator’s Vice Chairman Yan Qingmin said in April.
Sina Weicaifu, which means “small fortune” in Chinese, helped distribute two Zhonghuizaixian.com products, the Web portal said. Investors are concerned after Zhonghuizaixian.com said it’s facing a cash crunch with payments due as soon as Dec. 31, Weicaifu said.
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