TV investigation highlights investment scam

A stock investment service offering a fake profit-sharing model was exposed on Sunday after China Central Television (CCTV) revealed deceptive practices by some so-called private equity companies, including misleading clients and profiting from their losses.

The exposure came during the annual 3.15 Gala organized by China Media Group on World Consumer Rights Day, a program that spotlights violations of consumer rights and other problems affecting people's daily lives.

According to the investigation, a client followed a recommendation from a company claiming to be Tian Shun Investment, purchasing 2,000 shares of a stock at 18.82 yuan ($2.90) each, only to see it lose 8 percent of its value within two weeks.

In reality, the company's true name is Xinbenke Information Consulting Co, based in Zunyi in Guizhou province, and it has no financial licenses. The company actively recruits telephone sales staff to call potential investors and follow a prepared script to persuade them to buy specified stocks under the impression that these stocks are picked by private equity investors who offer insider information.

According to a customer service representative, the so-called specified stocks recommended by the company were actually chosen by the owner of Xinbenke, who used clients' funds for trading. Profits were shared with clients, but losses were ignored, creating a business model where the company always made money, regardless of the outcome.

Industry experts warn that such schemes are fraudulent, with scammers posing as legitimate financial advisory services. Clients are promised a share of profits when stocks perform well, but when stocks fall, these companies disappear, leaving consumers with losses to bear on their own.