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China Detains Some Involved in Illicit Sale of Wealth Management Products at Huaxia Bank

12-04 12:05 Caijing
Chinese authorities have detained some of the persons involved in the illicit sale of wealth management products at Huaxia Bank, which defaulted and generated losses of up to 100 million yuan for investors

Chinese authorities have detained some of the persons involved in the illicit sale of wealth management products at Huaxia Bank, which defaulted and generated losses of up to 100 million yuan for investors, the online news portal Sina reported.

In addition to the ex-employee, whom Huaxia bank has blamed for selling the wealth management products without permission and who was sacked later by the bank, authorities detained several others including the legal representative of Tongshang Guoyin Asset Management Company, manager of Zhongding, who issued the products.

Police are investigating on the issue for alleged breaches of laws, Huaxia said in a statement on Sunday.Sina said in a Monday report that head of Shanghai's banking regulatory bureau had headed to the bank.

Shares of Huuaxia Bank lost 4.15 percent to 8.08 yuan on the Shanghai Exchange on Monday while the main Shanghai index was down 1.03 percent. Huaxia opened lower at 8.01 and closed at 8.06 in Tuesday's morning trading.

Names of more than 70 investors were signed on contracts but over 700 investors were involved in the case as they raised the money together, according to Sina.

It said the bank is negotiating with the victims, so far without progress. The bank had said earlier that it would give them a solution in two months on Monday, but backpedaled on the same day, it quoted some victims as saying.

The victims blamed the bank for the wrongdoing because they said in was in the bank where they proceeded the whole transaction.

According to a report by the Guangzhou Daily on Monday, the product promised an 11 percent return with a minimum investment threshold of 500,000 yuan. Investors recently found out the investments wouldn't be repaid.

Related: Authorities Investigate on Huaxia Bank over Troubled Wealth Products

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