On June 24th, the topic labeled “Engaging in Unrelated Business Activities: Private Funds Selling Courses on Genealogy and Fortune-Telling” and “The Increasingly Abstract Irregularities of Private Equity Funds” has garnered attention.
The latest issue of the “Shenzhen Private Equity Fund Supervision Report” released by the Shenzhen Securities Regulatory Bureau on June 20th revealed that some private fund institutions in its jurisdiction have deviated from their main responsibilities and engaged in businesses unrelated to private equity fund management. These activities include selling false financial products, providing consultation and intermediary services, selling equity of target investment companies, assisting non-employees in obtaining qualifications, and even offering fortune-telling services through the practice of divination in office spaces.
According to the report, a certain securities private fund institution has an extremely low proportion of management fee income and performance-based rewards compared to its overall revenue. Its main income sources are through the controlling shareholder selling “investment courses” via social media and recommending clients to securities and futures companies under affiliate or corporate names in exchange for rebates.
This securities private fund institution shares office spaces with four affiliate companies, without hanging up signs or obvious identifications of the managing entity, where multiple individuals are engaged in businesses such as divination, knowledge-based payments, and genealogy revision, all unrelated to private fund management.
The deputy general manager of Gu Dong Butler and financial anchor “Li Yi in Hong Kong” posted on social media, “Are the ‘value-added services’ in the financial industry so convoluted now?”
Netizens commented, “This industry is becoming increasingly ‘worthless'”, “There are no real industries to invest in with funds, so they can only make money by teaching and deceiving”, “Fortune-telling too? Well, if metaphysics works, why not”, “From another perspective, certain financial domains rely on insider information or metaphysics.”
In China, private equity funds are investment funds raised from investors in a non-public manner. The investments of private equity funds include buying and selling stocks, equities, bonds, futures, options, fund shares, and other investment targets as stipulated in the investment contracts.