Huaxia plummets over probe into its illegal selling

2012-12-04 01:23:40 GMT2012-12-04 09:23:40(Beijing Time)  SINA.com

Huaxia Bank Co tumbled yesterday after the China Banking Regulatory Commission's Shanghai office started an investigation into wealth management products sold in the bank that have caused investors to lose heavily.

Beijing-based Huaxia Bank blamed an employee at a Shanghai branch for selling the products without permission, after media reports said the product could not repay investors.

The regulator said yesterday that a team has started investigating the case, and will announce the conclusion when the probe is completed.

Huaxia fell 4.2 percent to 8.08 yuan (US$1.3) yesterday.

The lender said in a statement on Sunday that the products, issued by the Zhongding Wealth Investment Center, are suspected of violating the law, and the police was also involved in the investigation.

The lender said in a separate statement yesterday that the four products issued by Zhongding and sold by its employee, surnamed Pu, have been available since 2011. The products, with a minimum 500,000 yuan investment, are invested in a pawn shop and a car sales firm, among others. Media reports have said the total sales of the products may involve over 100 million yuan.

According to earlier media reports, investors believed they would get 11 percent of returns when the products mature on November 25. But they found out they have lost their principal amount, and Pu who sold them the products no longer worked at the Jiading outlet. There is no news of his whereabouts.

The lender said on its official Weibo.com that they will cooperate with the police in the investigation.

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