The Shenzhen Municipal Public Security Bureau at a press conference yesterday warned the public to be on the alert for investment consulting fraud after eight illegal securities investment consulting agencies were found soliciting clients and offering advisory services not approved by the authorities.

Li Honglang, head of the economic crime investigation bureau under the municipal public security bureau, however didn't reveal the names of the agencies as the cases are still under investigation.

Li said none of the eight illegal agencies had been approved by the China Securities Regulatory Commission and nor had they been registered with the local industrial and commercial administrative bureau using actual company information.

By waiving membership fees, and advertising through TV, phone and the Internet, the eight illegal agencies convinced a number of investors to give them their trading codes and passwords. Some even falsely represented legal securities investment consulting agencies.

These agencies, which have between 20 and 100 clients each, are mainly based in Luohu and Futian districts. Li said these agencies had persuaded their clients to give them between 400,000 yuan (US$50,000) and over 5 million yuan to be invested in the securities market.

Some agencies did not sign any written contracts with the investors, he said.

The economic crime investigation bureau also found seven cases of fraud committed by illegal consulting agencies or individuals. They sent text messages to members of legal consulting agencies, pretending to be officials with the supervision office of the China Securities Regulatory Commission or investigation team of Shenzhen Stock Exchange.

They also sent investors documents bearing the seal of "supervision office of China Securities Regulatory Commission" or "investigation team of Shenzhen Stock Exchange which claimed that the legal agencies were under investigation by the China Securities Regulatory Commission. They would then tell the investors that they would take over and ask the investors to pay their consulting fees again.

Li warned investors of possible risks. "Take care when making investments with agencies that assure you of easy money," he said.

(Shenzhen Daily December 20, 2006)