Over 30% of Private Fund Institutions in Breach of Law: China’s Securities Regulator


An investigation conducted by the China Securities Regulatory Commission (CSRC) has uncovered widespread legal and regulatory breaches amongst the country’s private fund institutions.

The specialist investigation conducted by CSRC in the first half of 2018 found that 139 out of 453 private fund institutions investigated had engaged in either legal or regulatory breaches, accounting for 30.68% of the total.

These included 10 severe breaches involving illegal fund-raising, appropriation of fund assets or severe damage to fund assets and the interests of investors.

59 institutions sought to raise funds from unqualified investors or promised guaranteed principal and returns to investors; 48 had engaged in “capital pooling,” 54 had failed to conduct filing for private funds in accordance with requirements, or were securities funds whose staff were unqualified, or had failed to cooperate with regulatory inspections.

200 institutions had unsound internal controls, or engaged in business operations that were unrelated to private fund investment.

The private fund institutions investigated by CSRC included 281 private equity and venture capital fund managers, 119 private securities fund managers, and 53 other private fund managers.

The investigation covered a total of 4374 funds worth around 2.08 trillion yuan, accounting for 17.20% of the sector.