“Guxuantang” was convicted of the crime of illegal business operations for illegally recommending stocks.

Earlier, CCTV’s Finance Channel exposed a major case involving an illegal online platform that engaged in unauthorized stock recommendations. Over a period of more than one year, the criminals collected membership fees totaling over 38 million yuan from more than 3,000 investors, illegally providing “stock recommendation” services. Recently, the ringleader of this criminal gang was sentenced to six years in prison and fined 3 million yuan, receiving a severe legal punishment.

I. Illegal platforms offer “investment courses,” and salespeople transform into “unscrupulous mentors.”

2016 Starting in October of the year, Dai Moumou and others registered and established Shanghai Yuanhui Enterprise Management Consulting Co., Ltd. (hereinafter referred to as the “Company”). Without obtaining approval from the China Securities Regulatory Commission, the Company set up the website “Guxuantang” and published a large number of contents—including “advanced courses,” “mentor market analyses,” and “performance reviews”—that provided guidance on stock trading, thereby attracting investors’ attention. To present itself as highly successful and reliably profitable “mentors” or “stock gurus,” the Company fabricated the employment histories of its staff members, falsely claiming they had worked at “major securities firms” and “private equity institutions,” and concocted “past performance records.” In reality, none of the Company’s employees possessed the requisite qualifications for securities industry practice nor did they have any professional expertise in securities investment analysis.

II. “Profit Charts” Frequently Shared in WeChat Groups—Investors Top Up Funds to Join Membership

Under the promotion and hype of the “Gu Xuan Tang” website, investors—either on their own initiative or lured by others—joined WeChat groups set up by the company. These group names were mostly bold and full of enthusiasm, such as “June Special Operations Doubling Group” and “One-Batch Trading Strategy Secret Training Camp.” The company assigned its sales representatives to play various roles, including “mentor” and “student,” and continuously posted in these groups fake screenshots claiming things like “Teacher So-and-So’s Short-Term Stock Picks Soar by 30%” or “Student So-and-So Doubles His Monthly Earnings in Just One Month.” Subsequently, the company began peddling monthly, quarterly, semiannual, or annual membership courses ranging in price from 998 yuan to 69,800 yuan. Bombarded daily with “profit” messages in the WeChat groups, investors gradually lost their rationality and rushed to purchase these membership services.

III. Repeated Huge Losses from Recommended Stocks—After Seeking Redress by Requesting a Refund, the Individual Was Blacklisted.

After purchasing memberships, investors gradually realized that the stocks recommended by the “mentors” and “stock gurus” had stopped performing as promised. Instead of experiencing “consecutive sharp rallies” or “rocket-like surges,” the stocks consistently went down after purchase, steadily declining with no end in sight, leaving investors deeply trapped in losses. It was only then that investors finally woke up from their delusion, realizing they’d been duped and demanding that the company refund their membership fees. At first, the sales representatives would try to soothe investors, making excuses about the teachers’ poor performance or even persuading them to buy more advanced courses, promising to introduce even better instructors. But once they noticed that investors were firmly determined to get their money back, the sales reps would immediately block the investors on WeChat and other communication channels, completely ignoring any further requests or complaints.

IV. People's Courts Severely Punish Illegal Online Platforms; CSRC Reminds Investors

After receiving reports from the public, the Shanghai Bureau of the China Securities Regulatory Commission immediately launched an investigation and forwarded the relevant leads to the public security authorities for criminal investigation. Currently, the People's Court of Songjiang District, Shanghai, has convicted Dai Moumou and four other individuals of the crime of illegal business operations, sentencing each of them to fixed-term imprisonment of six years or less, confiscating their illegal gains, and imposing fines of up to 3 million yuan.

The China Securities Regulatory Commission (CSRC) solemnly reminds all investors to be vigilant and carefully discern the information they receive—do not be misled by the past performance claims of so-called “black mentors” or “fake stock gurus.” If you require securities investment advisory services, please choose securities companies or securities investment advisory institutions that hold the requisite securities investment advisory licenses (a list of such entities can be found under the “Regulated Entities” section on the CSRC’s website). If you fall victim to illegal stock recommendation activities, please report them to your local CSRC bureau or file a complaint with the public security authorities.

(Article sourced from the China Securities Regulatory Commission www.csrc.gov.cn)