Stock fraud involving 2.7 billion yuan exposed in Shenzhen

2021-Mar-5       Source: Szdaily.com

Twelve executives of Dalian Huaxun Investment Corp. (Huaxun), including the chairman surnamed Zhou, were recently arrested in Futian District for alleged stock fraud involving 2.7 billion yuan (US$417

Twelve executives of Dalian Huaxun Investment Corp. (Huaxun), including the chairman surnamed Zhou, were recently arrested in Futian District for alleged stock fraud involving 2.7 billion yuan (US$417 million), Southern Metropolis Daily reported.

[Photo: Nanfang Daily]

Longgang District Procuratorate has taken criminal coercive measures, which include interrogation, house arrest, detention and arrest, against more than 100 suspects at Huaxun.

Huaxun started operating in Futian District in 2015 and was listed on the National Equities Exchange and Quotations, or the New Third Board, in October that year. Its business revenue was mostly from securities investment consulting service fees.

The company invested significantly in online advertising, which attracted potential investors with a bait of “three free golden stocks.” Upon their registration via the ads, salespeople would contact the investors and invite them to a stock-choosing WeChat group, in which the price charts of some rising stocks were disseminated. The company would show the rising stocks but fail to mention the recommended stocks that actually fell. Most group members were actually undercover salespeople to brainwash the registered investors.

A Shenzhen resident surnamed Wang was one of the victims. Attracted by a promise of earning 100 to 300 percent profit in one month, Wang paid a membership fee of 28,000 yuan to purchase Huaxun’s stock-choosing software. No sooner had she paid the money than she was kicked out of the WeChat group and led to the Huaxun Stock app to enjoy the so-called “one-to-one service.” However, a majority of recommended stocks on the app later turned out to have poor performance. Wang attempted to contact the customer service but received no response. She called the police immediately.

Longgang police found Wang’s case was not alone, and formed a special group to investigate Huaxun. They uncovered that only four staff members in Huaxun were qualified to practice securities investment consultation.

From 2017 to 2020, securities supervision bureaus in the country dished out administrative punishments to the company for lacking securities practitioners’ qualifications and illegal recommendations of stocks.

According to the police’s preliminary investigation, there are at least 20,000 defrauded investors all over the country. If you have clues and evidence related to the case, please contact the Longgang Branch of Shenzhen Municipal Public Security Bureau by calling 0755-89329972. 

Editor: Fanny

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