Beijing commodity exchange chief flees with 170m yuan, say investors

Investors in a Beijing commodity exchange claim that the founder of the company has absconded with as much as 170 million yuan (HK$194.1 million) of their deposits and possibly fled the country.

Hundreds of people from across the mainland gathered at the headquarters of China Commodity Spot Exchange for the third day yesterday. Police have sealed the office and started to investigate the case.

The disgruntled customers claim that Guo Yuanfeng, the president and founder of the exchange, embezzled a combined 170 million yuan of their deposits and fled to Chicago.

The exchange has been in operation for 11 years as an online spot trading platform for steel, cotton, sugar, metal, coal and other products.

The scandal is a wake-up call to the government because it exposes huge loopholes in the country's spot-trading regulations.

'It could be much safer if there's a custodian to oversee the accounts,' said Huang Lei, an analyst at Yongan Futures Brokerage. 'What's worse, spot trading in China is a sheer speculators' market plagued by runaway investments.'

The mainland allows commodity futures trading on three exchanges in Shanghai, Dalian and Zhengzhou. Spot commodity exchanges can be opened after operators register with an industrial and commercial bureau.