Investment Banking Giant-Controlled Fund Manager Falls Foul of Shenzhen Regulator

What’s New: Shenzhen’s securities regulator has accused a private investment fund manager controlled by investment banking giant China International Capital Corp. Ltd. (CICC) of breaking regulations by promising investors that their principals wouldn’t see any losses and returns on its investment products wouldn’t fall below certain floors.

CICC-Qianhai Development Fund Management Co. Ltd. is required to properly respond and report to the China Securities Regulatory Commission’s Shenzhen branch after rectifying the alleged wrongdoings, according to a warning letter (link in Chinese) released by the regulator on Monday.

In a separate statement (link in Chinese) released Monday, the Shenzhen regulator said Wang Haipeng, general manager at CICC-Qianhai, should be held responsible for the alleged violations.

What’s the background: China has stepped up regulations to bar financial institutions from guaranteeing principal payments or returns on investments for any asset management products, such as fund products, as they are considered to pose financial risks.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Related: Extensions Possible for New Asset Management Rule Compliance: Regulator

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)