Beijing Fengli embezzles huge funds to make up the position chairman is blacklisted for life by China Foundation Association

category:Finance
 Beijing Fengli embezzles huge funds to make up the position chairman is blacklisted for life by China Foundation Association


According to China Securities Regulatory Commissions decision on banning market entry (No. 6, 2019), on September 18, 2015, the private fund product Changan Fengli No. 24 issued by Beijing Fengli was stopped from trading because it fell below the stop loss line, and the transaction could be resumed only after capital supplement. In such a case, how can we get the fund to make up the position?

According to the arrangement of Beijing Fengli, from January to April 2016, Changan Fengli 24 investors successively transferred their investment shares to Xiquan Investment Management Co., Ltd. (hereinafter referred to as Xiquan investment), and Changan Fengli 24 investors accordingly became the partners of Xiquan investment.

In order to transfer the funds of Fengli economic certificate and fenglijiuying to Xiquan investment, Beijing Fengli provided Guotai Junan, the custodian, with the supplementary agreement of fenglijiuying securities investment fund contract signed by fenglijiuying investors, which included Xiquan investment in the investment scope of fenglijiuying. But the investors of fenglijiuying are totally unaware of this.

The data shows that on May 13, 2016, the custodian transferred 35.5 million yuan of Fengli economic certificate into Fengli jiuying; on May 9 and 17, 2016, the custodian transferred 42.4 million yuan of Fengli jiuying into Xiquan investment in two times. On May 18, 2016, Beijing Fengli sent an instruction to Guotai Junan to supplement capital to Changan Fengli 24 with Xiquan investment fund. In order to ensure the safety of Xiquan investment funds, the custodian once requested that the funds invested by Xiquan investment in Changan Fengli No. 24 be returned to the custodian account of Xiquan investment in the custodian when the original road is liquidated. In order to meet the above requirements of the custodian, Beijing Fengli provided the custodian with the Changan fund instruction letter with the special seal for forgery of Changan fund contract, the content of which is that when Changan Fengli No. 24 is wound up, the fund will be returned to Xiquan investments custodian account in Guotai Junan. However, Changan fund is not aware of this.

In addition, Beijing Fengli also provided the custodian with a letter of explanation on forging Fengli economic certificate and the signatures of eight investors of Fengli jiuying, in which the investor knew the investment direction of Fengli economic certificate and Fengli jiuying capital and agreed to supplement the capital of Changan Fengli 24. However, investors of Fengli economic certificate and Fengli jiuying are still unaware of this.

After obtaining the above materials, the custodian shall make up 42.4 million yuan for Changan Fengli 24 through Xiquan investment according to the instructions of Beijing Fengli. After replenishment, Changan Fengli No. 24 resumed trading authority.

The CSRC believes that the above-mentioned operations have constituted an illegal act of misappropriation of fund property.

First, Beijing Fenglis misappropriation of private fund property to replenish the position of other products under its management is realized by means of forgery of document signature, forgery of seal and other means without the knowledge of investors. Beijing Fengli replenishes positions to products facing closing positions risk and transfers the high risk of other products to the original investors, which increases the risk of the other two fund products and damages the interests of investors. In the process of misappropriating the fund property, Beijing Fengli implements the misappropriation of the fund property prohibited by laws and regulations by using a variety of abnormal means. Mao Fengli, as the chairman of the board of directors of Beijing Fengli at that time, and Zhang Yonghui, as the general manager of Beijing Fengli at that time, should be recognized as the directly responsible person in charge.

Second, in order to restore the trading authority of Changan Fengli No. 24, Beijing Fengli embezzled the capital of Fengli economic certificate and Fengli jiuying to supplement the capital of Changan Fengli No. 24 by means of forgery of document signature and seal, and Changan Fengli No. 24 was able to restore the trading authority. The behavior of misappropriating private fund property violates the fiduciary duty of private fund manager in essence. The private fund manager shall manage the entrusted property in strict accordance with the contract. If the private fund manager violates the contract or uses the fund property for purposes beyond the agreed investment scope without the consent of the investor, and violates the fiduciary obligation, it is an act of misappropriation.

Third, the amount involved in this case is particularly huge. The parties involved use forged signatures and seals of relevant documents and other means. The circumstances are particularly bad, so it is legally justified to take measures against them to prohibit them from entering the securities market.

Finally, according to the first paragraph of article 123 of the securities investment fund law, the CSRC will impose a fine of 1 million yuan on Beijing Fengli, a warning of 300000 yuan on Mao Fengli and a warning of 300000 yuan on Zhang Yonghui. In addition, according to the above-mentioned decision on banning market entry, the CSRC has taken measures against maofengli for life-long market entry and against Zhang Yonghui for 10 years in accordance with Article 148 of the securities investment fund law and item 6, Article 3 and item 3, Article 5 of the provisions on banning securities market entry (CSRC order No. 115).

On January 7, 2020, China Foundation Association issued the notice of disciplinary action to Mao Fengli, and then Mao Fengli submitted a written defense.

Mao Fengli said that although she served as the chairman of Beijing Fengli, she did not participate in the fund management of Beijing Fengli and did not attend the regular meeting of Beijing Fengli. She believes that at present, there is no exact evidence to prove that she organized, planned, LED or implemented the illegal behaviors in this case. She neither knows nor participates in the capital supplement and transfer of Changan Fengli No. 24 case, and should not be identified as the person in charge directly responsible for this case.

The China Foundation association did not adopt Maos arguments and gave two reasons.

First, because the amount involved in this case is particularly large and the circumstances are particularly bad, in addition to the corresponding administrative penalty measures, Mao Fengli has also been banned from entering the market for life by the CSRC. According to the provisions of Article 22 of the measures for the implementation of disciplinary measures (for Trial Implementation), the association can use the facts confirmed in accordance with the relevant effective legal documents, i.e. the letter of decision on administrative penalty of the CSRC The relevant self-discipline rules directly punish the parties. Second, Mao Fengli, as the chairman of Fengli at that time, should be conscientious and diligent. The behavior of not participating in the fund management and not attending the regular work meeting proposed in the defense reason is the violation of the duty of being lazy and violating the duty of diligence of the senior management, rather than the legal reason of reducing or exempting the responsibility. Even if the reasons for Mao Fenglis defense are true, the association should also severely punish Mao Fenglis serious dereliction of duty. Source: surging news editor: Zhong Qiming, nf5619

First, because the amount involved in this case is particularly large and the circumstances are particularly bad, in addition to the corresponding administrative penalty measures, Mao Fengli has also been banned from entering the market for life by the CSRC. According to the provisions of Article 22 of the measures for the implementation of disciplinary measures (for Trial Implementation), the association can use the facts confirmed in accordance with the relevant effective legal documents, i.e. the letter of decision on administrative penalty of the CSRC The relevant self-discipline rules directly punish the parties.

Second, Mao Fengli, as the chairman of Fengli at that time, should be conscientious and diligent. The behavior of not participating in the fund management and not attending the regular work meeting proposed in the defense reason is the violation of the duty of being lazy and violating the duty of diligence of the senior management, rather than the legal reason of reducing or exempting the responsibility. Even if the reasons for Mao Fenglis defense are true, the association should also severely punish Mao Fenglis serious dereliction of duty.