New | Insurance fraudster Chen Yi receives suspended death sentence
Ex-insurance boss Chen Yi receives most severe punishment yet for illegal wealth products
A Shanghai court gave a former chief executive of the city's largest insurance brokerage a suspended death sentence yesterday for deceiving investors in illegal fundraising schemes.
The sentence given to Chen Yi by the Shanghai No1 Intermediate People's Court was the most severe punishment yet handed down for the illegal sale of wealth management products (WMPs).
Between 2010 and 2012, Chen's Shanghai Fanxin Insurance Agency raised about 1.3 billion yuan (HK$1.6 billion) by selling unauthorised WMPs offering lofty returns to more than 4,400 investors, the court said.
The fraudulent fundraising practices eventually landed investors with a combined loss of about 800 million yuan.
Chen, a 37-year-old woman, fled abroad with an unspecified amount of money and luxury items including jewellery, watches and leather bags in July 2013 but was caught by police in Fiji a month later.
"It will not be the last scandal involving wealth management products," said Dong Jun, a Shanghai-based hedge fund manager. "Illegal sales of the products were rampant and more fraudulent cases will be exposed soon."
Wealth management products - a major form of shadow banking on the mainland - are popular, with people buying the often-spurious financial products because they supposedly guarantee returns higher than time deposits at banks.