False advertisements fleece the public, financial influencers face prosecution.
Compiled from The Paper
[2] According to the Procuratorate Daily, the Pudong New Area People's Procuratorate in Shanghai recently filed a public prosecution against Xu, a financial influencer with over 4 million followers on a platform, on charges of false advertising, aiding cybercrime, and illegal business operations. It is reported that this financial influencer is Xu Xiaofeng.
Case review
[3] In 2019, Chen, Li (both handled separately), and others signed agency contracts to act as agents for an options sub-account software, engaging in illegal options trading without approval from relevant state authorities or qualifications for futures and options operations.
[4] To promote this sub-account software, Chen approached his friend, the aforementioned financial influencer Xu. The two signed a cooperation agreement stipulating that Xu would help Chen act as an agent for the software, using his influence to direct followers to invest through it, with Xu receiving a commission of about 20 yuan per transaction.
[5] Subsequently, Xu posted promotional content on the platform, luring followers to the software with promises of no capital limits and no trading restrictions. Seeing the product's good performance, Xu also had his team members promote it during live streams and used his customer service staff to recruit clients for investment and options trading, earning commissions. Audits revealed that Xu was involved with 12 agency accounts, with a total amount involved exceeding 16 million yuan and illegal gains of over 1.5 million yuan.
[6] Illegal securities and futures operations were not Xu's only source of income. Xu confessed, "Intermediaries approached us big influencers to post ads, mostly for traffic redirection. They would send me pre-written content with short links containing QR codes." Xu charged 20,000 to 30,000 yuan per ad, later increasing to 50,000 yuan.
In June 2020, Xu, knowing that the new advertisement link was identical to the previously reported fraudulent link, merely added reminders such as "do not invest in anything other than stocks" and "do not engage in fund transfers with other bank accounts" after the advertisement, and continued to publish the advertisement multiple times, illegally profiting 390,000 yuan. The link was later confirmed to be a WeChat QR code of a fraud group and is now under criminal investigation by the police.
In addition to the above advertisement confirmed as a fraudulent link, Xu also published multiple other advertisements. According to an audit, Xu illegally profited over 190,000 yuan from publishing false advertisements.
"Criminal Law of the People's Republic of China"
Article 222: Crime of False Advertising
Advertisers, advertising operators, or advertising publishers who, in violation of state regulations, use advertisements to make false publicity about goods or services, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than two years or criminal detention, and/or a fine.
Article 225: Crime of Illegal Business Operations
Whoever, in violation of state regulations, commits any of the following illegal business operations, disrupting market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and/or a fine of not less than one time but not more than five times the illegal gains; if the circumstances are especially serious, shall be sentenced to fixed-term imprisonment of not less than five years, and a fine of not less than one time but not more than five times the illegal gains or confiscation of property.
(1) Engaging in the sale of goods that are monopolized or subject to restricted trading under laws or administrative regulations without permission;
(2) Buying or selling import or export licenses, certificates of origin for import or export, or other business licenses or approval documents as stipulated by laws or administrative regulations;
(3) Illegally engaging in securities, futures, or insurance business without approval from the relevant state authorities, or illegally engaging in fund payment and settlement business;
(4) Other illegal business operations that seriously disrupt market order.
Article 287-2: Crime of Assisting Information Network Criminal Activities
Whoever knowingly provides technical support such as Internet access, server hosting, network storage, or communication transmission, or provides assistance such as advertising promotion or payment settlement for others committing crimes using information networks, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and/or a fine.
Where a unit commits the crime in the preceding paragraph, the unit shall be fined, and the directly responsible supervisors and other directly responsible personnel shall be punished in accordance with the provisions of the first paragraph.
Where the acts in the preceding two paragraphs also constitute other crimes, the offender shall be convicted and punished in accordance with the provisions for the heavier penalty.
[1] The author's perspective
The saying "The stock market carries risks; be cautious when entering" applies not only to the stock market but also to other investment fields. With economic development and improved living conditions, more and more people have spare money and want to invest, but unfortunately, they are financial novices. Therefore, they choose to follow so-called experts and big names online for wealth management. However, in recent years, frequent scandals have made it clear that trading and analysis are two different things. This is like a football commentator who may understand all tactics and techniques but cannot necessarily play brilliantly on the field. Thus, analysis detached from reality is nothing but armchair strategy.
In the process of investing, one must stay vigilant. Once encountering similar situations as mentioned above, it is essential to stop losses in time and use legal weapons to defend one's rights, preventing criminals from evading justice. Additionally, as an investor, one should not blindly follow others but must have rational judgment and a stable mindset to go far.
