I. The 28 Trillion-Dollar Bank Wealth Management Industry

Regulation: China Banking and Insurance Regulatory Commission (CBIRC)

Main Scheme: Bait and Switch

This primarily refers to the phenomenon of bank fly-by-night operations and wealth management fraud, where bank employees, enticed by high commissions from investment companies, sell the investment company's wealth management products under the bank's name, or bank employees directly fabricate wealth management products.

Classic Case:

In 2015, a customer service manager named Li at the Sub-branch of the Agricultural Bank of China in Tongzhou District, Beijing, sold external wealth management products that failed to honor the principal and interest upon maturity, involving 17 people and a total of 22.48 million.

In 2017, the fake wealth management case at the Hangtianqiao Branch of the China Minsheng Bank in Beijing was exposed, trapping 150 investors with an involved amount of up to 3 billion! This fraudulent wealth management product was highly recommended by the branch manager and bore the bank's official seal. The minimum investment was 3 million, with a half-year return of 8.4%, guaranteed principal and interest. Those deceived were private banking members with assets over 10 million, many of whom had personal relationships with the branch manager...

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Other Schemes: High Interest Deposits

Classic Case:In 2015, a case involving the Industrial and Commercial Bank of China's branch in Dongxiang (county), Linxia, Gansu Province, was exposed, involving 16 depositors with a total of 288 million yuan. A local large private enterprise head, Mr. Wei, first attracted deposits of 312 million yuan through high-interest rates, and then colluded with high-ranking bank officials to defraud loans. Several financial intermediaries took different amounts of commissions at various levels, far higher than the interest rate for depositors. Mr. Wei organized relevant personnel to forge large deposit certificates for the aforementioned depositors, and then used the fake certificates as collateral to defraud the bank of a huge loan...

Other schemes: Fake private banks

Remember, currently, a total of 17 private banks have been approved, and only 9 have opened so far.

When purchasing bank financial products, pay attention to the following 5 points:

1. Check the financial product code. It can be inquired in the "National Banking Financial Product Registration System" to ensure the authenticity of the product.

2. Clearly understand the contract terms, whether there is bank participation, whether there is a bank seal, pay attention to identify the authenticity of the seal. Read the instructions carefully to clearly understand the type of financial management, the direction of funds, returns, term, etc.

3. According to the latest regulations of the China Banking Regulatory Commission, the sales process of self-owned financial products and agency products must be synchronized with audio and video recording.

4. After the implementation of the new regulations on asset management, the guaranteed principal type of bank financial management has been eliminated, and the closed products of less than 3 months have also been eliminated.

5. There are also some so-called financial products sold by banks, the essence of which is actually dividend insurance or investment-linked insurance. The overall protection function of this type of insurance is not strong, the overall premium is relatively high, and the term is longer, which needs to be distinguished.

Appendix: Structured depositsForced by the new regulations on asset management, the structural deposits that have recently reached a scale of 8 trillion do not essentially fall under the category of bank wealth management. In layman's terms, structural deposits are essentially "fixed deposits + options". The largest portion of the funds is similar to regular deposits, while another part is invested in indices, exchange rates, gold, various financial derivatives, etc., offering the opportunity to obtain higher returns while bearing certain risks.

Structural deposits are also divided into principal-protected and non-principal-protected types.

II. Trusts with a scale of 23 trillion

Regulation: China Banking and Insurance Regulatory Commission (CBIRC)

Main scheme: Rigorous redemption

Rigorous redemption means that no matter what issues arise with the product, the trust company will ultimately underwrite it, ensuring the safety of your principal or principal and interest. Trusts have experienced more than a decade of brilliant development relying on the era's background and rigorous redemption. However, the new asset management regulations stipulate that if an institution engages in rigorous redemption practices, penalties will be imposed on the institution, and reporting of such practices is encouraged. Therefore, the era of blindly purchasing trusts is gone.

When buying trusts, pay attention to the following 4 points:

1. There are only 68 trust companies in China, so ensure the authenticity of the product.

2. The threshold for trusts is generally 3 million yuan, with only 50 small-amount slots for individual products ranging from 1 million to 3 million yuan.

3. Truly focus on the trust company's management capabilities, the strength of the underlying projects, and risk control measures, etc.4. PPP and fundization will be the trend for infrastructure-type transformations, with channel businesses transitioning towards asset securitization. In the future, trusts will shift from a financing model to a wealth management model, with a focus on high-end customer consulting, family inheritance, and charitable trusts.

III. Insurance with a scale of 17 trillion

Regulation: China Banking and Insurance Regulatory Commission (CBIRC)

Common tactics: Some salespeople's rhetoric

Includes: Exaggerating returns, false promises, concealing surrender losses, signing on behalf of others, false medical history, following the salesperson's script for return calls, and gift temptations, etc.

When buying insurance, pay attention to the following 3 points:

1. Remember, insurance is great, but it is about protection, primarily for its protective function.

2. Before signing, read your insurance contract word for word three times. If you don't understand, read it three more times. If you still don't understand, find someone who can help you understand it.

3. If you have been mis-sold, first try to collect evidence and call the insurance regulatory commission (CBIRC) complaint hotline, it works!

IV. Public funds with a scale of 12 trillionRegulation: Securities Regulatory Commission

Main Scheme: Performance Lies

Public funds, with their standardized operations, low barriers to entry, and good liquidity, have become one of the main representatives of inclusive finance.

Compared to others, public funds have fewer schemes, mainly when it comes to discerning the performance of funds, one must "keep their eyes wide open."

Some funds, despite being established for several years, only choose the return rate from the past three months as a marketing highlight, while others, not having operated for long, claim a return rate of XX% since inception. This is because selecting a period with relatively better performance for promotion can confuse investors.

When purchasing public funds, pay attention to the following four points:

1. Beware of fake funds; always buy from the official websites of fund companies, banks, and reputable third-party fund sales companies.

2. Look for funds that have been established for a longer time, with a more stable historical performance, and reliable fund managers. One must see through the fog to understand the true performance of the fund.

3. Avoid purchasing products that do not match one's own risk profile. Generally, the risk ranking of public funds is: Equity > Mixed > Bond > Money Market.

4. Fund regular investment is a very suitable investment method for the lazy. But remember, persistence is key, and knowing when to take profits is crucial.Five, the private equity sector with a scale of 12 trillion

Regulation: China Securities Regulatory Commission (CSRC), China Securities Investment Fund Association (AMAC)

Main schemes: fundraising fraud

The development of private equity funds has been extremely rapid, growing from 10 billion to 10 trillion in just 10 years. However, behind the high growth lies hidden risks, with many companies using the name of private equity to aggressively raise funds. There was the 4 billion Beijing Huarong Pu Yin case in 2014, the serial fraudster in 2015, known as the "Yue Buqun" of the financial circle, with the 6 billion Jin Saiyin incident, the Shanghai Da Da Group that went from nude photos to a 13.9 billion fraud; and last year's 3.8 billion Shenzhen Tongying Fund.

Looking back, they often use these tricks to deceive investors' trust. First, they put on a facade by renting very high-end and luxurious clubs, giving investors an "upscale" image. Second, they associate with officials, promoting under the guise of government projects. Third, they use false guarantees as a cover. Fourth, they boast about being listed, which the uninformed might think is impressive, but in reality, listing on a regional stock exchange has a very low threshold, much lower than the New Third Board, not to mention compared to the Growth Enterprise Board and the main board.

When buying private equity, pay attention to the following 6 points:

1. Recognize the classification of private equity products. There are securities-based, equity-based, and other types. In addition, the product must be registered with AMAC after fundraising is completed, and the registration number can be looked up.

2. Have a professional management team with professional qualifications, including at least 2 senior managers.

3. Have a clear fund structure.

① The project is real, and the investment logic is clear.② There is a clear indication of the total fundraising scale, with an allowable fluctuation of no more than 20%.

③ There are explicit management fees and a distribution plan for project profits, with a general guarantee of fixed returns not exceeding 15%.

④ A dedicated custodian bank is involved, with a special fund custody account opened, and the account name is essentially consistent with the name of the issued fund.

⑤ The project's profitability, prospects, or sources of repayment are convincing.

⑥ There is a clear risk control statement, such as collateral, pledge, guarantee, and liquidation line, and attention is paid to the collateralization ratio and the strength of the guarantor.

4. Threshold

Number of investors: The total number of investors in a single private equity fund does not exceed 200.

Investment threshold: Starting at a minimum of 1 million.

5. Promotion

No public promotion, and the use of words like "guarantee," "high returns," and "risk-free" is avoided.6. Risk Disclosure

Before signing a contract, it is necessary to explain the relevant laws and regulations, the cooling-off period, and the arrangements for follow-up confirmation through methods such as recorded phone calls, emails, and letters. Emphasis should be placed on revealing the risks associated with private equity funds, and a risk disclosure statement must be signed.

VI. P2P with a Cumulative Transaction Volume of 6 Trillion

Regulation: China Banking and Insurance Regulatory Commission, Internet Finance Association

Main Scheme: Running Away

When it comes to P2P, the most memorable is still the wave of running away in the past two years. The eZubao case, involving 58.7 billion, is still shocking to this day, and it has quieted down a lot since then. According to statistics from the Online Lending House, the number of P2P platforms in normal operation has decreased from 3,383 in January 2016 to 1,931 at the end of last year, and it is expected to drop to around 800 this year.

In terms of regulation, the current 1+3 regulatory system has been established. The registration and filing work for P2P institutions will be completed by the end of June this year. The "Internet Finance Registration and Disclosure Service Platform" was launched last June and has connected 115 platforms. Currently, there are 879 platforms in normal operation nationwide that have announced the signing of direct custody agreements with banks, accounting for 44.98%.

When buying P2P, pay attention to the following 5 points:

1. Four Red Lines: The intermediary nature of the platform, providing information matching for investors and fundraisers; the platform itself shall not provide guarantees; no fund pools; no illegal absorption of public deposits.

2. Whether there is fund custody, whether there is information disclosure, whether there is registration and filing.3. Learn to assess the quality of a platform by examining its background (association endorsement ≠ a high-end background, publicized state-owned/venture capital/listed background ≠ truly having a background), looking at the executives, examining the projects, reviewing operations, analyzing data, considering negative aspects, and observing development. Each point should be studied individually.

4. Understand the various business lines of online lending, how each type of business manages risk control, what the risk points are, where fraud is likely to occur, and how overdue loans are handled. Currently, campus loan services have been suspended, cash loan services are under rectification, and large-scale non-compliant businesses have been cleaned up.

5. Carefully select and compare options (as the saying goes, "shop around"), and invest in small amounts and diversify.

Seven, Stock Market

Regulatory Body: China Securities Regulatory Commission (CSRC)

Main Schemes: Nested Traps

As a stock trader, you should be familiar with these terms: a legal casino, stock market crash, demon stocks, market manipulation, Xu Xiang's white coat, washing the market, insider trading, stock price manipulation, thousands of stocks hitting the limit down, and concept speculation, etc. Retail investors are harvested wave after wave.

However, with the strengthening of regulation, the penalties imposed by the CSRC are also becoming increasingly severe. Just last week, they issued the largest fine in history, amounting to 5.5 billion. The day before yesterday, Li Ka-shing announced his retirement. If you had invested in Cheung Kong in 1972, your return today would be 1500 times, and with dividends, the return exceeds 5000 times. (A 5000-fold return in 46 years is similar to Warren Buffett's 10,000-fold return in 50 years.) This is what is referred to as value investing, and it is hoped that the A-share market can quickly embrace this environment.

Furthermore, when it comes to stock trading, it is important to understand technical analysis, but never fully trust it, nor rely on it entirely. The creator of the Chan theory committed suicide by jumping off a building, and after years of studying Gann's theory, no one has been successful relying solely on it.The most critical point in investing:

Without strength, do not casually use leverage.

VIII. Futures and Foreign Exchange

Regulation: China Securities Regulatory Commission (CSRC), State Administration of Foreign Exchange (SAFE)

Main scheme: Profit from both rises and falls

The statement "profit from both rises and falls" is correct; when the market goes up, you can go long, and when it goes down, you can go short. However, there is a second half to this statement: losses can be incurred from both rises and falls. The leverage that allows for gains also facilitates losses. The leverage in futures is generally around 10 times, while in foreign exchange, it is typically between 100 to 500 times, making it even more thrilling.

The most critical point in investing:

Ensure you have a strong heart, regardless of profit or loss.

Note: Currently, there are four major futures exchanges in China: China Financial Futures Exchange, primarily trading stock index futures and government bond futures; Shanghai Futures Exchange, primarily trading precious metals; Dalian Commodity Exchange, primarily trading chemical products; Zhengzhou Commodity Exchange, primarily trading agricultural products.

IX. Gold, Silver, Crude OilMain Scheme: Gold-Medal Analysts Setting Up a Trap

Trading schemes are similar to futures, where one can make money on both rises and falls, with leverage and T+0 trading.

Often when the stock market falls, calls or QQ messages come in: "Bro, have you lost money in stocks recently? Let me introduce you to a product that can make money on both rises and falls, buy and sell at will, and you won't lose much." By using beauties to lure, packaging gold-medal analysts to set up a trap, they lead you into the trap. They boast about high returns, deceive you into opening an account, give you small benefits, cause losses, urge you to add more money, and then kill quickly with a sharp knife.

However, in reality, there are transaction fees for both buying and selling, and it is leveraged. The platform earns money from transaction fees and overnight fees. In addition, many spot platforms are essentially a gambling game. The trading software is manipulated by the back end, and the exchange, members, and agents set up traps at all levels. When the market is at a high position, you can't close the position, and the price that should fall, on the trading software, soars straight up... It is almost impossible for individual investors with limited strength to make money, and the money lost is earned by the agents.

On the exchange side, at present, there is only one precious metal exchange directly approved by the State Council, the Shanghai Gold Exchange. There are also many large and small platforms approved by provincial, municipal, and local governments. The most well-known incident was the Yunnan Pan-Asia Nonferrous Metals incident in 2015, which affected 220,000 investors in more than 20 provinces with a total of 43 billion.

After the chaos of precious metals in many places, the regulatory authorities made up their minds to start cracking down on the chaos of exchanges in the past two years. Trading venues operating "precious metal spot" were concentrated and rectified.

The most critical point when investing:

This circle is too chaotic, don't touch it if you don't understand

Ten, private lending

Main scheme: high returns, routine loansFunding side: Typically, they lure investors with the promise of annual interest rates of 20%, 30%, or even higher returns. After initially investing tens of thousands, investors, tasting the "sweet head," add hundreds of thousands, or even millions more, only to end up with the borrower fleeing and the company going bankrupt.

A well-known case is the Sichuan Huatong Guarantee incident. They forged a large number of loan projects, registered hundreds of shell companies, and raised funds from the public through dozens of investment and wealth management companies, ultimately leading to a breakdown in the funding chain. According to media reports, the amount involved in the case is around 10 billion, and after the incident, its executives fled abroad...

Lending side: In the past two years, "loan trap" cases have emerged in various places such as Shanghai, Jiangsu, Zhejiang, Chongqing, and more, which are even more deceptive than usury. Victims often see their debts balloon tens of times in just a few months. Some borrowers who initially borrowed only tens of thousands of yuan are forced to repay millions; some cannot find the borrower as the repayment period approaches, and once the deadline passes, they are subjected to brutal debt collection, with the "default agreement" demanding the surrender of mortgaged properties.

The two most critical points when investing are:

1. You covet their interest, they covet your principal.

2. Remember, private lending rates below 24% are legally protected, 24% to 36% is a voluntary negotiation area, and rates above 36% can be appealed to the court for recovery.

Eleven, Digital Currency

Main routine: A day in the cryptocurrency circle is like a year in the world.

At the beginning of the year, the 3 a.m. sleepless blockchain group was popular on WeChat, with venture capital bigwigs leading the "leeks" to imagine how blockchain will shape the future world, while despising the smell of copper on the cryptocurrency people.

For a while, everyone got blockchain anxiety, as if not understanding blockchain would immediately be abandoned by the times. A while ago, the editor was also anxious until he saw this sentence from Keso:"I can't think of any real opportunities that are fleeting and gone in the blink of an eye, and I can't understand why people have to be so impatient and anxious all the time. If you missed the chance to be Netscape, Yahoo, you could become Google; if you missed the chance to be Google, you could become Facebook; if you missed the chance to be Facebook, you could become WeChat, DiDi, or ofo. If blockchain is really a big opportunity, how could it possibly be an opportunity that you miss if you're slow? Moreover, which real big opportunity has ever given birth to an unprecedented and unparalleled big project from the start? Which promising great technology is not gradually achieving its greatness?"

I hope this can cure everyone...

In September last year, several departments including the central bank jointly issued a document, officially declaring that the ICO (Initial Coin Offering) business is clearly prohibited in our country. At that time, there were not a few currencies whose value doubled or even dozens of times in a day. As long as the first public fundraising was completed and the currency was listed for trading, it was quickly pumped up. Securing a share was a victory, and many ICOs were sold out in ten minutes, turning into real money, with successive waves of newcomers, their eyes red with greed.

The most tragic thing is the influence of the overnight wealth mentality, which ultimately led to falling into a pyramid scheme disguised as a digital currency scam.

A more well-known case is last year's Five Elements Coin pyramid scheme, which used fake photos and videos to make participants feel that "the Five Elements Coin organization is very wealthy and powerful, and even a project secretly supported by the country." The lowest-level members could earn up to 400,000 by developing new members, while intermediate members could earn 2 million. It developed 400,000 people within 5 months, with the final case amounting to more than 9.2 billion yuan.

Key points for investment:

1. Study hard: Have you understood these concepts - decentralization, value internet, double spending, hash computation, asymmetric encryption, mining, difficulty, 51% attack, multi-signature, consensus algorithms (POW/POS/DPOS/PBFT), smart contracts, public chain, private chain, consortium chain, Token, ICO, cold and hot wallets, DAPP, soft and hard forks, impossible triangle, ERC-20, decentralized exchange, segregated witness...?

2. See through projects with no substance: No application scenarios, no technical team, no business logic. Truly understand the project team and read the white paper.

3. For those who only speculate on coins, I can only wish you good luck.

Twelve, summary of various other scams1. The collapse of Qianbao's 50 billion scam!

On December 26, 2017, Zhang Xiaolei, the actual controller of Qianbao, surrendered himself, marking the collapse of an illegal fundraising platform comparable to Ezubao. Established in 2012, Qianbao required users to pay a deposit of 100,000 yuan and promised a minimum monthly return of 4,000 yuan to over ten thousand yuan for completing a certain amount of "viewing ads" tasks daily. By watching ads, completing tasks, earning extra money, and receiving rewards, one could earn 4,000 to 5,000 yuan a month with a 100,000 yuan deposit, with an annualized return exceeding 40%, which is nothing short of getting something for nothing.

Zhang Xiaolei once bought four shell companies on the New Third Board in one go and even boasted about redeeming the entire New Third Board. Now, he will spend his time in a long prison term trying to redeem himself.

2. The IGOFX 30 billion foreign exchange fraud case

Known as the largest foreign exchange scam in history, the mastermind behind it is a post-90s girl. With the slogan "earning US dollars while lying down," coupled with weekly dividend payments and a pyramid system of "referring others to earn rewards," the scheme rapidly developed about 400,000 downlines in China within half a year.

In June of last year, due to the UK general election, the British pound's exchange rate against the US dollar plummeted, causing all investor accounts to suffer massive losses. The main suspect, Zhang Xueqiao, is accused of fleeing to Malaysia to join her husband, who is a major shareholder of the financial fraud organization IGOFX, and her whereabouts remain unknown to this day.

3. The consumer rebate scam

The main feature is the intervention of an internet third-party platform in the transaction process between merchants and consumers, promising a partial return of the consumption amount on the platform, or offering an equivalent amount of points for cash consumption, to induce consumers to register as members and consume, and to attract merchants to join the platform to recycle payments. Focus Interview once exposed this in detail, and a search online reveals a frighteningly long list.

For example, the "Wanjia Shopping" rebate website, which had the widest impact and the most severe consequences, claimed to have 3 million members nationwide, with agency outlets in more than 2,000 counties and cities across the country, and 100,000 allied merchants. By the time the website was investigated, it actually had nearly 2 million members, with the case involving an amount of 24.045 billion yuan.

4. The flood of original shares

(The original text ends abruptly, and there is no information provided about the "flood of original shares." Therefore, I cannot provide a translation for this part.)Under the impact of the investment concept that "no equity, no wealth," a series of original share sales dramas begin to unfold. In addition to the temptation of overnight riches and other benefits, the "listed company" halo provides a more legitimate facade for illegal fundraising. Most companies start selling original shares after being listed on the Shanghai Equity Custody and Trading Center, and then they vanish. The media jokingly say that selling original shares is like selling cabbages...

Furthermore, there are those who use the guise of overseas investment and high-tech development, impersonating or fabricating websites of internationally renowned companies, and publishing online sales of foreign funds, original shares, overseas listings, and development of high-tech products.

Remember: being listed is not the same as being publicly traded, and the fourth board is not the third board; there are no free lunches falling from the sky.

5. Hebei Postal and Coin Card Fraud Case

Similar to previous scams involving precious metals and crude oil spot transactions, postal and coin card trading is a new type of financial fraud that has become popular in the past three years. This type of trading treats stamps and commemorative coins as stocks, first creating a market surge, then luring investors to buy at high prices, after which the market plummets. The manipulators reap huge profits before creating a new round of market movements, and the vast majority of investors end up losing their entire investments.

On December 29 last year, the Jinhua Public Security Bureau in Zhejiang cracked down on a company, Zhejiang Huan'en, arresting 392 suspects and freezing 1.02 billion yuan, with 45,000 victims. Zhejiang Huan'en is just one of about 2,000 member companies of Binhai Bulk Commodities.

Binhai Bulk Commodities, also known as the Hebei Postal and Coin Card Trading Center, began to transform into postal and coin card trading in October 2015 after the inter-ministerial joint meeting initiated a new round of rectification for the national precious metals and crude oil spot transactions. It later became a leader in the field, once ranking first in the country's postal and coin card electronic trading with a daily transaction amount of about 2 billion yuan.

6. "Cultural Exchange" 1 Billion Yuan Fake Futures Case

The Guangdong Creative Cultural Property Rights Trading Center's company, with cultural artworks as the subject of a fake futures platform, deceived investors in less than half a year. The trend charts displayed within the trading software were actually copied from foreign futures platforms' K-line charts, having no connection to the claimed art investment. By using methods such as live lectures for brainwashing, shills performing award ceremonies, and creating realistic futures trading K-line charts, even some seasoned stock market investors were caught in the trap. Last year, 240 suspects, including the organizers and core members of the group, were criminally detained.7. Binary Options

In April 2016, the China Securities Regulatory Commission (CSRC) has already characterized binary options as "illegal" and stated that their trading is akin to gambling. There have been instances where local public security authorities have filed cases against binary options platforms on charges of fraud.

Furthermore, there are schemes that use the guise of elderly care, luring the elderly with the promise of high returns, or through organizing so-called health lectures, free physical examinations, free tours, and distributing small gifts to entice the elderly to invest their funds. There are also illegal fundraising activities under the pretext of repurchasing collectibles at high prices; with a monthly interest rate of 30%, these schemes are sustained by developing downlines. As early as over 20 years ago, they were identified as one of the world's largest Ponzi schemes, such as the MMM Financial Mutual Aid, which defrauded India and then came to China, among others.

The most critical point in investing:

Regardless of the name under which it is offered, if it promises you high returns, or if it directly or indirectly recruits members, resolutely avoid it!

Thirteen, be more vigilant

If there is a problem with the compliance of a product, call the complaint hotline of the relevant regulatory authority. If it is suspected of illegal fundraising, contact the public security bureau and the economic crime investigation department.

Of course, this is a matter to be addressed afterward. It is still essential to strictly control the investment process beforehand. If the product is compliant, there is no other way.

Remember, remember:

Breaking the rigid payment guarantee is not just a slogan!Investment carries risks, and entering the market should be done with caution; it's not just a phrase to be taken lightly!