China's forex watchdog has alerted investors to the growing
number of online scams involving foreign funds.
Illegal funds purporting to offer investments in foreign assets
and guaranteeing high returns have succeeded in tricking some
investors, said the State Administration of Foreign Exchange (SAFE)
on Monday.
The illegal funds use pyramid selling techniques, and will
quickly collapse once money stops flowing in, spelling disaster for
investors, SAFE warned.
The administration asked investors to be alert to the risks.
China Central Television (CCTV) reported last month that an
illegal fund named Switzerland Mutual Fund had promised Internet
investors a hefty 300 percent yield within 450 days.
Claiming to have been founded in 1948, the fund has raised over
100 million yuan (US$12.9 million)?on the mainland since it
entered the market last year.
But, according to CCTV, the fund has never been approved by the
China Securities Regulatory Commission.
Currently, Chinese individuals who want to invest abroad can
only buy investment products provided by banks and fund management
companies under a Qualified Domestic Institutional Investor (QDII)
scheme.
(Xinhua News Agency March 29, 2007)