Recently, Haiyin Wealth Management Co., Ltd. was suspected of illegal fundraising and is under investigation, with several executives being taken into custody for “compulsory measures.” At the end of last year, Haiyin Wealth suffered a financial crisis.
On the morning of September 11th, the Fengxian Branch of the Shanghai Public Security Bureau reported that they had initiated an investigation into the alleged illegal fundraising activities of Haiyin Wealth Management Co., Ltd. Several suspects including Han, Wang, and others have been taken into custody for criminal measures.
According to a report by Caixin, Han and Wang, who are the actual controllers of Haiyin Wealth, are Han Hongwei and his son Han Xiaos. Other top executives of Haiyin Wealth include Han Hongwei’s wife, Wang Pei, Chairwoman of the Haiyin Charity Foundation, and Wang Dian, CEO of Haiyin Wealth (sister of Wang Pei).
A report from the self-media group “Investment Warning” quoted information from Haiyin employees that on the evening of September 9th, the boss of Haiyin Wealth, Han Hongwei, and over twenty executives were taken away by the police for investigation.
In December last year, Haiyin Wealth, known as the third-largest wealth company in China, ceased payment on all wealth management products, causing market concern.
“National Business Daily” quoted information from several Haiyin Wealth investors, revealing that the minimum investment amount in products sold by Haiyin Wealth was 300,000 yuan or 1 million yuan, with annualized returns ranging from 7% to 10%, and the funds were mostly used for corporate financing.
According to investigations by “Securities China” journalists, Haiyin Wealth relied on over 180 offline wealth centers spread across more than 90 cities, attracting over 40,000 high net worth individuals. The total number of issued wealth management products reached 465, with a total size exceeding 70 billion yuan.
The investigation found that during the fundraising phase, Haiyin Wealth had dozens of empty shell companies appearing as independent third parties. Investors’ funds were deposited into these companies’ accounts, creating a huge nested dual-layer fund pool. The wealth management products serving as fundraising tools were registered and filed through a “pseudo-gold exchange”, all suspected of illegal financial activities. In the investment phase, the destination of funds did not match the underlying assets as claimed in the offering documents, with a majority of funds having unclear whereabouts.
Established in November 2006, Haiyin Wealth is a core company of the “Haiyin Group” and was listed on Nasdaq in 2021. In its prospectus, Haiyin Wealth claimed to be the “largest domestic provider of fixed-income real estate products” and invested in real estate projects of well-known and financially sound large developers such as Evergrande and Sunac, with durations typically ranging from 6 to 36 months.