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Chinese regulator investigates Zhejiang Ruifengda AM 

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China is currently investigating a hedge fund firm after it stopped repaying its investors. The move comes in the wake of increased scrutiny of the RMB5.5tn ($760bn) industry, according to a report by Bloomberg. 

On Saturday, the China Securities Regulatory Commission said that it was looking into alleged illegal activities at Zhejiang Ruifengda Asset Management, following reports from local state media on Friday that the firm had stopped paying investors redeeming money and that its controlling shareholder was missing. The CSRC did not provide further details on said alleged illegal activities.

Ruifengda was established in 2016 and manages assets worth RMB3bn. The firm is known for creating a product that yielded a return of 795% in less than two years through 30 April, according to data compiled by Shenzhen PaiPaiWang Investment & Management.

Some of Ruifengda’s products had guaranteed annual returns of at least 8%, a practice that is prohibited. These were backed by a unit of a company called Riying Holdings, which has an office near Ruifengda’s Shanghai office, according to a report by state-backed media Yicai citing unnamed investors. Li Min, Chairperson of Riying, and Sun Wei, Ruifengda’s de facto owner, are among the investors, according to Yicai.

The report cites registry information on the Asset Management Association of China’s website in revealing that Ruifengda’s largest shareholder is Qiu Wenlong, who owns 80%, while Liu Licheng holds the remaining 20%.

Both Ruifengda and Riying’s offices have been sealed off by local police while Li and Sun are both reportedly missing, according to a report by the state-owned China Securities Journal.

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