"Fivefold Returns" Unlisted Company Investment Scam... FSS Issues Consumer Alert

Recently, the Financial Supervisory Service (FSS) issued a consumer alert as scams involving overseas unlisted companies and initial public offering (IPO) subscriptions have been on the rise.

On June 23, the FSS released cases of scams related to overseas unlisted companies and IPO subscription fraud.

First, there have been cases where scammers stole investors' funds by promising investment opportunities in overseas unlisted companies. An advisory firm lured investors by claiming it had exclusive contracts with global investment firms and could offer access to overseas unlisted company investments. The advisory firm deceived investors by promising returns of three to five times their original investment, even though it did not actually invest in the unlisted companies.

Through these schemes, the advisory firm received funds from individual investors, but the investors could not find or confirm the contract details via mobile or the company’s website, and could not even obtain a copy of the contract. In the first place, it is illegal for an advisory firm to receive and hold investors' funds in escrow.

There is also a type of IPO subscription scam. In one case, an asset management firm solicited investment funds by claiming that, as an institutional investor, it would be allocated more shares than individual investors and high returns would be guaranteed. In reality, even institutional investors are not allowed to subscribe to IPOs using others’ funds. This asset management firm participated in the subscription under the company's name and falsely promised to distribute 50% of the profits from selling allocated shares to investors.

After settling the first profits and gaining investors’ trust, the firm induced reinvestment by presenting fabricated profit settlement statements and other false documents. From this point, investors could no longer receive settlement of profits nor verify their IPO subscriptions. When investors tried to contact the asset management firm, all contact was cut off.

An official from the FSS stated, "It is illegal for advisory firms to solicit investment funds from clients, and it is also illegal for advisory or asset management firms to enter into contracts to act as agents for clients' IPO investments under the company's name. When entering into a financial contract, always check the contract document, and if you encounter any suspicious cases, stop the transaction immediately and report it to the FSS or the police."

This content was produced with the assistance of AI translation services.