The private equity Ruifengda "running away" incident continues to ferment.
On May 13, the shares of a number of NEEQ companies involved in Zhejiang Ruifengda Asset Management Co., Ltd. (hereinafter referred to as "Ruifengda") such as Agrocarpus Technology and Weicai Education were suspended to further verify relevant matters. On the same day, the share price of Riying Holdings, a Hong Kong-listed entity of Riying Investment Holding Group Co., Ltd. (hereinafter referred to as "Riying Holdings"), a suspected affiliated enterprise, plummeted by nearly 60%.
Late at night on May 11, the China Securities Regulatory Commission announced that from the current situation, Ruifengda was suspected of a number of violations of laws and regulations, and decided to file a case for investigation and strictly deal with it in accordance with the law.
According to a number of media reports, the actual controller of Ruifengda has lost contact, and some investors have reported the case because the product cannot be redeemed.
The reporter of "International Financial News" found that the company is located in a French-style single-family villa building in Pudong, Shanghai, and many office entrances and exits have been seized by the Shanghai Pudong Economic Investigation Detachment. A nearby staff member told reporters that there have been many people who have come to consult recently, but the company has been seized last week (May 10), and the specific situation can only be learned from the economic investigation.
Where did Ruifengda, who "ran away", invest his money, how did the actual controller take the money away, and where is he now? There are still many doubts to be solved.
Suddenly "running away"
According to the official website of AMAC, Ruifengda, which was established in October 2016, is a private equity fund company with a registered address in Huzhou, Zhejiang, but an office address in Pudong, Shanghai.
On May 9, a rumor of Ruifengda's "running away" quickly fermented in the industry. According to media reports, the products subscribed by many investors in Ruifengda are currently unable to be redeemed, and the actual controller of Ruifengda has lost contact.
Before the incident, some employees of Ruifengda were not aware of the company's abnormality. Just last month, Ruifengda also participated in the research activities of a listed company.
The reporter of "International Financial News" visited Ruifengda's office in Lane 727, Wuxing Road, Pudong New Area, Shanghai, where there is a beautiful French office garden, which is composed of a number of French-style single-family buildings, almost every building has a courtyard garden, and not far away is a green lake.
The office environment away from the hustle and bustle of the city is extraordinarily quiet, and the "runaway" incident shatters this tranquility. In just a few days, the private equity firm has attracted many visits from investors and industry insiders. A cleaning staff at the scene seemed to be accustomed to the sudden "liveliness": "You came to that company, right?" She skillfully told reporters that to go to Ruifengda's office in Building 10 of the Hui Mansion, she had to pass through two fire doors, but the building was already empty, and the gate had been sealed.
Ruifengda's seized office in Building 10 of the Hui Mansion (Xia Yuechao/photo)
The reporter saw at the scene that the door of Ruifengda's office on the 3rd floor of Building 10 of the Hui Mansion had been closed by the Shanghai Pudong Economic Investigation Detachment on May 10. Building 8, which is adjacent to Building 10 of Hui Mansion, was also temporarily closed due to a notice request from the Pudong Economic Investigation Detachment.
Ruifengda's seized office of Building 8 of Hui Mansion (Xia Yuechao/photo)
A nearby staff member told reporters that many people have come to ask about this company in the past two days, but they are not clear about the specific situation, and can only tell the other party that they need to go to the Pudong Economic Investigation Detachment to consult the situation.
Ruifengda's "runaway" incident has attracted the attention of regulatory authorities. The official website of the China Securities Regulatory Commission announced on May 11 that recently, the media reported that the actual controller of Ruifengda "ran away", which attracted the attention of all parties. The China Securities Regulatory Commission (CSRC) attached great importance to it and acted quickly to organize the China Securities Regulatory Bureau, the Asset Management Association and other relevant units to carry out verification. Judging from the current situation, Ruifengda Company is suspected of a number of violations of laws and regulations, and the China Securities Regulatory Commission has decided to file a case for investigation and strictly deal with it in accordance with the law. The China Securities Regulatory Commission (CSRC) has informed the public security organs and others of the situation and strengthened coordination and cooperation.
Previously, AMAC had issued three tips about Ruifengda, one is that the registered place and the office are not in the same jurisdiction; Second, the account opening rate of investors' targeted disclosure is low; Third, there is an overdue liquidation fund.
Equity Transfer
What is the origin of Ruifengda, which "ran away"?
According to the official website of AMAC, Ruifengda has a total of 12 full-time employees, with a management scale of 2 billion to 5 billion yuan, and although the company's registered capital is 30 million yuan, the paid-in capital is only 7.5 million yuan. The actual controller of the company is Qiu Wenlong, and the legal representative and general manager is Liu Licheng, who holds 80% and 20% of the shares respectively.
However, according to the information of the enterprise investigation, in January 2022, Qiu Wenlong and Liu Licheng all withdrew from their shares, and in September of the same year, the legal representative was changed from Liu Licheng to Li Tao, and at the same time, Qiu Wenlong and Liu Licheng also withdrew from the positions of supervisor, executive director and general manager respectively, and Li Rong and Li Tao held these two positions respectively. In terms of equity change, while Hainan Smart City Holding Group increased its stake by 17%, Li Tao withdrew from the ranks of shareholders and added a new shareholder, Shanghai Qingcheng Culture Club Co., Ltd.
And all kinds of signs show that Ruifengda has an inextricable relationship with a company called Riying Holdings. Ruifengda's office registered with the AMAC is Building 8 of Shanghai Hui Mansion, but the offices of Building 8 and 10 were actually sealed after investigation. Among them, the wall of the gate of Building 8 was inlaid with the signboard of "Riying Holdings". At the entrance of Building 10, there is a sign indicating that Ruifengda is on the 3rd floor of Unit B of the building.
Xia Yuechao/photo
According to the company's information, one of the shareholders of Ruifengda, Shanghai Qingcheng Culture Club Co., Ltd., holds 49% of the shares of Shanghai Qingsheng Enterprise Management Co., Ltd., and the other 51% of the company's shares are Huachu (Jilin) Energy Investment Co., Ltd. (hereinafter referred to as "Huachu Energy").
Huachu Energy is 100% owned by the State Carbon Investment (Jilin) Double Carbon Operation Group Co., Ltd., and the company's historical shareholder is Riying Holdings. The company exited its 65% stake on April 26, 2024.
According to a number of media reports, the chairman of Riying Holdings is Li Min, and the actual controller behind Hainan Smart City Holding Group is Li Wei, and the two are considered to be "husband and wife" by insiders. According to the company's information, Riying Holdings was once held 99% and 1% of the shares by Li Min and Sun Wei respectively, and on April 15, 2024, both of them withdrew from the company's investors. The company's current two major shareholders are Xiwei (Xiamen) Electronic Technology Co., Ltd. and Shanghai Riying Equity Investment Fund Co., Ltd. Shanghai Riying Equity Investment Fund Co., Ltd. has been involved in a number of contract dispute cases since the beginning of this year, and has been listed as the person subject to execution by the court, with a total amount of 52.7621 million yuan.
In addition, the three senior executives of Ruifengda, including Liu Licheng, the company's legal representative, general manager and executive director, Xie Xuefei, deputy general manager, and Chen Qingji, the person in charge of compliance and risk control, all have bad records.
Liu Licheng and Xie Xuefei used to work together at Jiangsu Fuxin Wealth Asset Management Co., Ltd., serving as risk control manager and training director respectively, but in November 2020, the Hanjiang Branch of the Yangzhou Municipal Public Security Bureau announced that Jiangsu Fuxin Wealth Asset Management Co., Ltd. used high returns as bait to absorb funds from unspecified members of the public, and was suspected of illegally absorbing public deposits.
On April 19, 2023, the Futian Branch of the Shenzhen Municipal Public Security Bureau issued a report on the case of "Jin'an Holding Company", stating that Shenzhen Jinan Holdings Co., Ltd. was suspected of illegal fund-raising criminal activities.
Suspected of "sitting on the banker"
Where did Ruifengda, which "ran away", put its products to?
According to a number of media reports, the bottom layer of Ruifengda's products is mainly invested in NEEQ stocks, and there may be multiple layers of nesting. According to the 2023 annual report, a number of Ruifengda's products appear in the list of the top ten shareholders of many NEEQ companies. Among them, some products have had a short-term concentrated volume increase in early May. According to industry analysts, Ruifengda may be cashed out by trading NEEQ stocks at the difference between the primary and secondary markets.
Why do you choose to "sit on the banker" NEEQ stocks?
In this regard, lawyer Kong Xiangjun, deputy director of Beijing Lantai (Shanghai) Law Firm, told the "International Financial News" reporter that private equity funds sit on the bank to manipulate the new third board stocks, which is a new type of criminal method of maliciously cashing out by taking advantage of regulatory loopholes. For example, some of the targets held by Ruifengda have short-term increases of dozens or hundreds of times."
Kong Xiangjun believes that private equity funds hold a large number of illiquid NEEQ stocks, which is mainly reflected in the risk of redemption. The core reason why private securities products cannot be redeemed is the use of funds and leverage.
For the situation of multi-layer nesting of private securities products, Kong Xiangjun analyzed that it is mainly to circumvent the qualified investor system, avoid the investment scope and regulatory indicators, and avoid leverage constraints, "The consequences of multi-layer nesting are still very serious, especially the moral hazard of middle-level institutional managers, which is mainly reflected in the unclear and untrue underlying assets, malicious encroachment, increasing the difficulty of supervision, and ignoring the rights and interests of investors."
Who is responsible
According to the official website of the AMAC, Ruifengda disclosed a total of 70 products, of which 2 have been liquidated in advance. How can a company with only 12 people manage nearly 70 products with a combined scale of billions at the same time?
Zhang Qing, a lawyer at Shanghai Hansheng Law Firm, said in an interview with the International Financial News that if a private equity firm has a small staff but operates dozens of products at the same time, it needs to pay attention to the risks behind it.
"The number of funds and the size of funds operated by private equity companies should be limited, and eggs should not be put in one basket. There should be a cap on the liquidation of one fund before new funds can be issued, so as to avoid turning the left hand into the right hand and buying and selling by oneself. Avoid the emergence of financial institutions that are too big to fail, which will have a destructive effect. Lawyer Zhang Qing said.
According to public information, Ruifengda's products involve a number of securities firms as custodians, including CITIC Securities, Huatai Securities, China Merchants Securities, China Galaxy Securities, Guotai Junan, Caitong Securities, Huaan Securities, etc. Some people in the industry have questioned whether the custodian has been derelict in his duties by failing to report his knowledge.
Should the custodian be held liable for the thunderstorm of private equity funds?
Zhang Qing previously told reporters that although the custodian's fees are borne by investors, the selection and employment of custodians is fund managers, so some unscrupulous custodians will turn a blind eye to the behavior of fund managers. "Normally, there are a lot of valuation frauds in the private equity market."
Kong Xiangjun said that for such incidents, whether the custodian is liable mainly depends on whether it correctly fulfills its custody obligations, such as whether it executes the fund manager's illegal investment instructions, whether it issues false fund performance reports, and whether it complies with the custody agreement or the fund charter.