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FINANCE

Blame Game Erupts After Investors Bilked of Billions

Fuxing Group investors gather in front of the office of the China Banking and Insurance Regulatory Commission in Beijing on July 26. Photo: Caixin
Fuxing Group investors gather in front of the office of the China Banking and Insurance Regulatory Commission in Beijing on July 26. Photo: Caixin

The alleged embezzlement of billions of yuan by the head of a financial conglomerate who has now vanished has ripped open a can of worms about the role and responsibilities of banks that are entrusted with looking after the assets of private funds — products sold to high-net-worth individuals and institutions by investment companies and mutual funds.

Regulators and legal experts are locked in a heated debate about whether custodian banks — financial institutions that a fund appoints to hold, safeguard, and administer its assets — should take more responsibility and compensate those who own shares, or units, in the fund when money disappears.

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