Changsha Citizens Buy Wealth Management Products Involved in Illegal Fund-raising Case

　　After purchasing several hundred thousand yuan of wealth management products in the bank, three citizens including Li Ling and Hu Jianshu of Changsha City were strangely involved in an illegal fund-raising case involving hundreds of millions of yuan.

After suffering losses, the three took a number of involved banks to court, and were supported by the Changsha Yuhua District People's Court and the Changsha Intermediate People's Court, and received compensation.

In 2021, after the judgment came into effect, many of the sued banks will submit it to the Higher People's Court of Hunan Province for retrial.

　　The Higher People's Court of Hunan Province accepted these three cases. Recently, the court made a ruling on the Li Ling case, which was the first to be accepted. It rejected the retrial applications of Bank of China Hunan Branch and Bank of China Changsha Chishu Branch, and maintained Changsha City. The judgment of the Intermediate People's Court.

The wealth management with an annual yield of 7% attracts many citizens

　　The civil judgment issued by the People's Court of Yuhua District, Changsha City shows that on November 6, 2013, when Li Ling was conducting business at the Bank of China Changsha Chishu Sub-branch, she was recommended by the bank staff and purchased a copy of the "book" provided by the bank staff. CITIC 1309 Phase Structured Securities Investment Collective Fund Trust Plan Entrusted Subscription Contract, the trustee of the contract is Hunan Bofeng Asset Management Co., Ltd. (hereinafter referred to as "Hunan Bofeng").

　　The industrial and commercial registration information shows that Hunan Bofeng was established in April 2011. Its business scope includes: asset management and consulting; investment management and consulting (excluding financial, securities, and futures information consulting); investment and management of its own or other funds.

　　Li Ling said that at that time, the bank staff introduced that the product "guaranteed principal and interest, no risk, payment at maturity, and legal compliance".

Moreover, in 2013, many wealth management products have high interest rates, so I have no doubts at all.

　　The wealth management product contract signed by the two parties stated: Li Ling entrusted Hunan Bofeng to purchase and hold the CITIC 1309 Phase (also known as "Yuelu No. 4") structured securities investment collective fund trust plan, and the entrusted holding time started from November 2013. From January 6 to November 5, 2014, the subscription amount is 600,000 yuan, and as a class A beneficiary, an annual return of 7% of the trust funds can be obtained.

　　The document states that the trustee of the trust plan is CITIC Trust Co., Ltd., the securities brokerage service provider is BOCI Securities Co., Ltd., and the custodian bank is Bank of China Co., Ltd.

On the same day, Li Ling transferred 600,000 yuan to the account of Hunan Bofeng.

　　Hu Jianshu, an old customer of ICBC, once bought a lot of financial products in ICBC, "holding the bank's highest-level credit card, whether it is the company's salary payment or stock trading account, all of them are in ICBC." But in March 2014 On the 4th, when the bank account manager recommended the purchase of "Yuelu No. 5" Bofeng products, he was still hesitant.

In order to reassure him, the account manager Li Zhan even signed his name on the contract text with a total amount of 500,000 yuan.

　　On January 27, 2014, another investor Jiang subscribed for the "Yuelu No. 5" trust plan of 50,000 yuan at the Industrial and Commercial Bank of China Changsha Shuguang South Road Sub-branch, recommended by bank staff.

　　In Yiyang City, Hunan Province, at the end of 2014, a citizen named Yue subscribed for 100,000 yuan of the Bofeng company trust product "Feng Ying Phase 1" when the staff of the Yiyang Heshan Sub-branch of the Agricultural Bank of China recommended "principal protection and interest payment". ".

The investment target is fictitious

　　Previously, the case of the "Bofeng Department" illegally absorbing public deposits had caused a sensation in Hunan and even the whole country.

A reporter from China Youth Daily and China Youth Daily investigated a number of related lawsuits in Hunan and found that the trust entrusted wealth management product initiated by Hunan Bofeng was recommended by many banks in Changsha and Yiyang, which had a far-reaching impact.

　　The 4 judgments indicated that the above 4 investors did not wait for the payment of the trust products.

However, this is not the whole case involving the Hunan Bofeng Department.

The reporter learned that at the end of 2012, under the persuasion of bank staff, Mr. Du in Changsha purchased the "CITIC-Yuelu No. 3 - Robust Layered Securities Investment Collective Fund Trust Plan 1212" with a pension of 70,000 yuan. , the annual rate of return is 6%.

　　A year later, Mr. Du went to the bank to check the account and found that the principal and interest promised in the agreement had already been deposited into the account.

Seeing that the other company kept its promise, Du added another 100,000 yuan.

This time, he signed the entrusted subscription contract for the "CITIC 1309" (also known as "Yuelu No. 4") structured securities investment collective fund trust plan.

The annualized rate of return is 7%.

　　But at the end of December 2014, Mr. Du never received the interest promised in the contract, and even his principal was gone.

Almost at the same time, Ms. Wang of Changsha purchased "CITIC-Yuelu No. 3" at the bank.

After one year's payment on schedule, she purchased Hunan Bofeng's "China Resources Trust-Yuelu No. 6" product again in August 2014.

In the end, the hard-earned 350,000 yuan was lost.

　　When the deceived people flocked to the 12A floor of the Dongyi Time District Commercial Building at No. 38 Renmin East Road, Changsha City, there were already hundreds of people gathered at the gate of Bofeng, Hunan to collect debts.

And these people hold a lot of entrusted subscription contracts such as "Yuelu No. 5, Yuelu No. 7, CITIC No. XX".

　　The bank involved was also condemned.

According to a Xinhuanet report on March 18, 2015, according to a preliminary investigation by the regulatory authorities, Hunan Bofeng and its affiliates illegally carried out entrusted wealth management and sold about 400 million to 500 million yuan of trust products to the public, of which part of the collection involved banks. About 200 million yuan.

At that time, the Hunan Supervision Bureau of the China Banking Regulatory Commission had not issued a financial license to Hunan Bofeng and Deng Lin, and Hunan Bofeng could not engage in commercial banking business such as absorbing public deposits.

The inside story of illegal fundraising

　　According to Changsha Intermediate People's Court's 2018 Xiang 01 Xing Chu No. 19 Criminal Judgment, Hunan Bofeng, founded in 2011, is actually controlled by Changsha native Deng Lin who worked in Changsha Commercial Bank (later renamed "Changsha Bank"). .

　　Deng Lin, who was born in 1975, established Hunan Bofeng Investment Guarantee Co., Ltd. in 2008 (renamed Hunan Bofeng Financing Guarantee Co., Ltd., referred to as "Bofeng Guarantee" in 2013), and actually controls Hunan Bofeng Asset Management, Boyang Chuangfu Investment Management (Hunan) Co., Ltd. (hereinafter referred to as "Boyang Chuangfu"), Hunan Boyi Investment Co., Ltd., etc.

Deng Lin's Bofeng company has never been qualified as a banking financial institution, and has been illegally raising funds since April 2011.

　　Since its establishment, Bofeng-based companies have relied on subcontracting state-owned banks to sell trusts, or concocted trust products that have been terminated or even "non-existent", and sold trust products to hundreds of investors at an annual yield of 6% to 8.5%.

However, the business scope of Bofeng Asset Management is: asset management and consulting; investment management and consulting (excluding financial, securities, and futures information consulting); investment and management of its own or other funds.

In other words, it is not eligible to sell the trust.

　　According to the testimony of Hunan Bofeng shareholder and supervisor Dai Mou, the operation mode of Bofeng Company is: first negotiate good cooperation with trust companies, custodian banks and securities dealers, open a trust fund raising account, and then Bofeng Company opens its own account name to raise funds. Accounts are recommended by bank staff to attract customers to sign entrusted subscription contracts.

In order to attract more customers, the products are also dismantled and sold.

After the client funds enter the account of Bofeng Company, Bofeng will subscribe for trust products.

　　The Changsha Intermediate People's Court found that from December 2010 to September 2014, the defendant Deng Lin subscribed for "Feilong No. 1" by entrustment, and Bofeng Asset Company subscribed for "1107 Phases" and "1206 Phases (Yuelu No. 2") )", "Yuelu No. 4", "Zhongbao No. 1 (Wan Ying No. 2)", "Yuelu No. 3", "Yuelu No. 6", "Bofeng Smart Choice No. 1" and "Bofeng Asset Management Portfolio Asset Management Entrusted Wealth Management" In the name of “precious metal entrusted wealth management” and other wealth management products, with interest returns ranging from 6% to 8.5% per annum as bait, in the name of Bofeng Guarantee Company and Bofeng Asset Management, they signed a subscription contract with the investors, a total of 3497 people Illegal fundraising totaled 630 million yuan.

　　The above-mentioned "Yuelu No. 4" (1309 issue) subscribed by Li Ling et al. illegally raised 33.16 million yuan.

The funds obtained from this illegal fund-raising were mainly used by Deng Lin to pay the interest of the fund-raising, the purchase of trust plans, and the operation of Bofeng affiliated companies.

　　The "Yuelu No. 5" trust products subscribed by Mr. Hu and others, and the "Yuelu No. 7", "Boyang Chuangfu No. 1" and "Zhongying Phase I" released by Bofeng Asset Management are completely fictitious.

The trust products such as "Feng Ying Phase I" subscribed by Yiyang citizen Yue and "Jinbo Growth" subscribed by other citizens have not been established.

　　The Changsha Intermediate People's Court also found that Hunan Bofeng and Boyang Chuangfu controlled by Deng Lin were established for illegal fund-raising activities, and after their establishment, the main activity was to commit illegal fund-raising crimes, while Hunan Bofeng Financing Guarantee Co., Ltd. It mainly provided assistance and cooperation for Bofeng Asset Management and Boyang Chuangfu in their illegal fund-raising criminal activities. The fund-raising funds were also controlled and used by the defendant, Deng Lin.

　　According to the Criminal Judgment of Xiang 01 Xingchu No. 19 issued by the Changsha Intermediate People's Court on November 7, 2018, in addition to the crime of illegal deposit absorption, Deng Lin also constituted the crime of fundraising fraud, and was sentenced to life imprisonment, deprivation of political rights for life, and All personal property will be confiscated.

On April 30, 2019, the judgment was upheld by the Hunan High Court's final ruling.

Why are banks getting involved?

　　According to the criminal judgment of Changsha Intermediate People's Court, from December 2010 to September 2014, Deng Lin arranged for Zhu Yong, Zhang Xiaohua, Wang Benyuan, Zhou Zhao and others to open up sales channels such as ICBC, Bank of China, and Agricultural Bank of China. The sales staff of Bofeng Company will connect with the above-mentioned bank outlets, and by helping the bank outlets to complete the task of collecting deposits, and giving bank staff sales commissions, etc., the bank staff will be encouraged to publicize and recommend to the masses, and the bank staff will provide Bofeng Company's entrustment. The subscription contract is signed by the investing masses, so that the masses, based on their trust in the bank, take the guarantee of principal and interest, risk-free publicity and recommendation letters as true, so that they can sign on the entrusted subscription contract of Bofeng Company and pay the investment money.

　　Tang Mou, president of Shuguang South Road Sub-branch of Changsha Branch of Industrial and Commercial Bank of China Hunan Branch, confirmed that 0.8% of the investment in "Boyang No. 2" will be given to his sub-branch as a rebate.

According to Li Mou, the marketing manager of Tianyuan Securities, the sales starting point of Bofeng products is 50,000 yuan, and if they are sold in banks, they will give bank employees 0.75%-1% rebates.

　　After the incident, Li Ling, Hu Jianshu and Ms. Jiang took the relevant banks to court in order to recover their losses. However, the defendants, Bank of China, Industrial and Commercial Bank of China, and their relevant sub-branches believed that the investor’s loss had no causal relationship with the bank’s behavior, and requested The court dismissed the plaintiff's claim for compensation.

　　Bank of China Hunan Branch argued that the case was a business trust dispute. The bank did not sign a sales or financial service contract with Ms. Li Ling, and the two parties did not constitute a trust relationship and were not liable.

The Hunan Branch of Industrial and Commercial Bank of China believes that recommending the victim to purchase Bofeng's products is not the bank's legal act and should not be held responsible.

And the case has exceeded the statute of limitations.

　　On the morning of October 29, 2020, the People's Court of Yuhua District, Changsha City held a public hearing of Mr. Hu and Ms. Jiang v. ICBC Hunan Branch and ICBC Shaoshan Road Branch.

The case attracted nearly 200 citizens to watch the trial.

　　The three judgments issued by the People's Court of Yuhua District, Changsha City held that in these cases, the defendant bank did not conduct sufficient review and evaluation of Bofeng Company and its trust products, and the supervision was not in place; Improper prompts during publicity and promotion objectively caused the plaintiff to take the propaganda and recommendation letters that guarantee principal and interest, no risk, and mistakenly believe that the trust plan involved was risk-free or low-risk; The plaintiff developed trust based on the state-owned banking background of the defendant bank, and then signed an entrusted subscription contract and incurred losses.

Therefore, the defendant has serious fault.

　　However, the plaintiff, as a person with full capacity for civil conduct, should know that the purchase of the trust plan involved is a risky investment. In order to obtain returns, the plaintiff puts himself at risk and should bear certain responsibilities.

Based on the above situation and with reference to the effective precedents of similar civil cases involving Bofeng Company and the defendant's negative attitude in resolving disputes, it is determined that the branch involved in the defendant's bank should bear the vast majority of the losses in this case, that is, 90% of the plaintiff's investment principal.

　　On December 7, 2020, after the first-instance verdict was handed down, Li Ling, Hu Jianshu and Ms. Jiang said they were satisfied with the verdict.

But when they learned that the bank had appealed, they also filed an appeal.

　　In addition, a second-instance judgment issued by the Yiyang Intermediate Court on November 5, 2019 showed that in the lawsuit brought by the Yiyang citizen Yue against Bofeng Asset Management and the Agricultural Bank of China Heshan Sub-branch, the court ruled that Bofeng Asset Management Yue should return the principal and interest, and the bank should be fully liable for the unreturnable principal.

　　In July 2021, the Changsha Intermediate People's Court pointed out in three judgments that the accused bank should compensate the victim for all the investment principal.

The court's judgment also stated that financial institutions should bear civil liability for breaching their suitability obligations, that is, when selling high-risk financial products such as bank wealth management products and insurance investment products to financial consumers, the selling institution must fulfill the obligation of letting customers know about the products and putting them together. Obligations such as the sale of appropriate products to appropriate financial consumers.

The performance of this obligation is the main content of "seller's due diligence", and also the premise and basis of "buyer is responsible".

　　It is reported that the accused Bank of China Hunan Branch, Industrial and Commercial Bank of China and their sub-branches refused to accept the relevant judgment of the Changsha Intermediate People's Court and filed an application for retrial with the Hunan Provincial Higher People's Court.

On March 31, 2022, the Higher People's Court of Hunan Province issued a civil ruling of 2022 Xiangminshen No. 608 in the case of Li Ling v. Bank of China Hunan Branch and its sub-branches, rejecting the bank's application for retrial.

　　On April 13, 2022, Hu Jianshu and other victims informed that there were more than 700 investors sued in total, and the cases have been heard in various district courts in Changsha.

Some victims have already received compensation after the second-instance judgment of the Changsha Intermediate Court.

　　China Youth Daily and China Youth Daily reporter Hong Kefei Source: China Youth Daily