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Beijing Police Starts Investigating Zhongzhi, A Struggling Wealth Management Firm

Beijing Police Starts Investigating Zhongzhi, A Struggling Wealth Management Firm
Leading Chinese wealth manager Zhongzhi Enterprise Group is the subject of a police investigation in Beijing, as per a social media statement on Saturday by the Chaoyang Public Security Bureau.
Zhongzhi threatened to rekindle investor concerns that China's property debt crisis is spreading to the wider financial sector when it announced earlier this week that it is substantially insolvent with liabilities of up to $64 billion.
The company is heavily involved in China's $3 trillion shadow banking market, which is comparable to the size of the French economy, and has a significant exposure to the country's real estate market.
There was no answer from Zhongzhi to emails or phone calls form the media seeking a comment on the issue.
In a letter sent to investors on Wednesday, Zhongzhi expressed regret and stated that, while its estimated total assets were 200 billion yuan, its total liabilities were between 420 billion and 460 billion yuan ($58 billion to 64 billion).
Beijing officials posted on social media that they were investigating "many" people connected to the company and urged investors to report any losses they had in order to aid in the continuing probe.
"Investors are requested to actively cooperate with the police in investigating and collecting evidence and safeguard their rights and interests through legal channels," it read in part.
What offences Zhongzhi or the other people were allegedly suspected of committing was not mentioned in the post.

Christopher J. Mitchell

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