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Chinese scam suspects ‘fake online finance lectures to dupe 35,000 investors out of 400 million yuan’

Mainland police have detained 369 people suspected of being involved in an online investment scam using live-webcam lectures by fake financial experts to cheat 35,000 people out of 400 million yuan (HK$464 million).

The victims were duped into using a shell platform when investing on the mainland’s notoriously volatile stock market by the promise of making quick healthy profits, China’s state broadcaster, China Central Television reported.

Police arrested the suspects in August after raids in 16 different locations, including Beijing and cities in Shandong, Hebei and Guangdong provinces, after a tip-off in Shenzhen in April, it said.

The suspects used the popular instant messaging tool, QQ, and “live webcasts” to make claims that they were experienced securities analysts and knew “secret tips” people could use to earn healthy profits from investing on the stock market, CCTV reported.

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They claimed to have offshore registered A-share trading websites, which investors could access to make quick profits, the report said.

The suspects claimed their trading platform could bypass the mainland’s regulation of “T+1” trading – a system in which investors must wait at least one extra day before selling shares they have bought. They claimed their platform offered “T+0” trading, so that investors could quickly buy and sell the shares on the same day.

To lure unsuspecting investors, the platforms pretended to provide healthy profits after their initial investments, to encourage them to invest more heavily.

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But in reality they were using a shell platform, that was not linked to the mainland stock market and the suspects stealthily collected huge commissions from share investments and leverage fees, the report said.

One Shenzhen resident, who followed the trading tips of a fake analyst in a webcast, invested 120,000 yuan on the platform. She went to the police after realising she had been duped when she lost 50,000 yuan in less than two weeks, the report said.

“Swindlers are making use of the rapidly evolving internet with new technologies, means and channels – this time live-webcast lecturing,” said Ma Jun, chief researcher at Wdzj.com, a website monitoring the online lending industry.

“Police are catching up with such trends to boost fighting such cases.”

Authorities have already been alerted to irregularities involving online frauds.

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Earlier this year, China carried out a huge crackdown on illegal fund-raising, including the burgeoning e-finance sector, in light of a series of crimes last year that involved record amounts of money.

Swindlers have been taking advantage of China’s e-financing boom as regulations struggle to catch up. Ezubao, once China’s biggest peer-to-peer online lending firm, illegally collected more than 58.2 billion yuan from 900,000 investors through a Ponzi scheme in less than two years, the Supreme People’s Procuratorate said in April.