Citing fraud case, lawmaker warns investors to beware of London gold

PUBLISHED : Monday, 30 November, 2009, 12:00am
UPDATED : Monday, 30 November, 2009, 12:00am

A lawmaker has urged investors betting on rising gold prices to stay alert after a man lost HK$18,000 in a few weeks.

The man, who identified himself as Mr Chan, said he received a cold call in early July from an agent for an investment firm, asking him to buy 'London gold'. 'He said it was easy to earn money from trading gold [on the London markets],' Chan said.

A mainlander who arrived seven years ago, Chan said he earned about HK$6,000 a month.

The man said his firm had headquarters in an office building in Central and more than 100 staff.

Chan signed a 20-page document in early July and gave the agent a cheque for HK$10,000 to open an account. It took only five minutes to set it up and the agent did not explain the risk involved or details of the document. Chan later deposited another HK$10,000.

Chan called a few times to try to get the money back. At one point, the agent said he made a profit and gave him HK$2,000. However, Chan later found that the money was part of his principal. On August 13, Chan called again to close his account and was told the account had a balance of at least HK$18,000. But the agent later said only HK$300 was left.

Chan then went to the firm's office and asked for a copy of the transaction record, and realised the agent made 29 transactions in five weeks. It also showed the agent had pocketed HK$3,150 in 'commissions', taken from the account.

'We suspect that this is a fraudulent case as the agent was making transactions frequently, as many as 13 times in a day, and he got commission for each of the transactions,' said legislator Pan Pey-chyou, who is helping Chan.

As the price of gold has been rising, Pan said he expected more complaints. He said he received two other complaints over 'London gold', and urged the government to better regulate the industry.