Boycott illegal securities, futures, and fund activities to safeguard investors' legitimate rights and interests.

Boycott illegal securities, futures, and fund activities

Protecting investors' legitimate rights and interests

       Illegal securities, futures, and fund activities are typical mass-involved illegal and criminal activities that severely disrupt the normal economic and financial order, undermining social harmony and stability. Currently, these illegal activities are widespread and occur in numerous locations, often conducted online, involving organized teams, and exhibiting clear signs of professionalization. They are highly deceptive and misleading, gravely harming investors' interests and destabilizing the capital market. We hereby remind all investors: when engaging in securities, futures, and fund investments, you should always choose legitimate institutions.

1. What Constitutes Illegal Securities, Futures, and Fund Activities

Illegal securities, futures, and fund activities refer to operations involving the issuance of securities or the trading of securities, futures, and fund products—activities that, by law, require approval or authorization from the securities regulatory authorities or departments specifically authorized by the State Council, and thus should be subject to statutory oversight—yet are conducted without such necessary approval. To engage in securities and futures business, an institution must first obtain approval from the China Securities Regulatory Commission (CSRC) and acquire the appropriate business qualifications. Any entity conducting securities and futures activities without holding the requisite qualifications is deemed an illegal entity.

2. What are the main types of illegal securities, futures, and fund activities?

(1) Off-exchange margin financing refers to the practice where institutions or individuals—not licensed to provide securities financing services—lend funds to investors, enabling them to trade stocks using borrowed capital and margin in designated securities accounts. In return, these entities typically charge interest, fees, or share in the investors' profits. According to the Securities Law, engaging in "off-exchange margin financing" constitutes an illegal securities business activity. Therefore, investors are strongly advised to stay away from such practices, enter the market legally, and make rational investment decisions.

(2) Illegal stock recommendations refer to activities where unqualified institutions and individuals provide investors or clients with paid consulting services—such as securities investment analysis, forecasts, or advice—either directly or indirectly. Common behavioral patterns include stock recommendations delivered via online live streams, Weibo and WeChat platforms, specialized software, and educational training sessions. According to the Securities Law, these activities are suspected of illegally operating securities-related businesses.

(3) "Stock market black mouths" refer to institutions or individuals who fabricate and disseminate false or misleading information, thereby influencing stock prices and even manipulating the market for illegal gains. Their typical behavioral patterns include spreading fabricated securities-related misinformation, engaging in manipulative trading tactics like "hat-grabbing" trades, and exploiting informational advantages to manipulate the market. According to the Securities Law, these actions may constitute offenses such as fabricating and spreading false or misleading information, as well as manipulating the securities market—both of which are illegal and criminal activities.

(4) Illegal issuance of stocks refers to non-listed companies publicly transferring equity interests to unspecified individuals or, in the case of targeted transfers, to more than 200 specific individuals—without obtaining approval from the securities regulatory authority under the State Council or a department authorized by the State Council. This practice typically exhibits the following three key characteristics: First, companies lure investors with promises of listing both domestically and internationally, along with the prospect of substantial returns; second, the target audience is the general public, particularly middle-aged and elderly individuals; and third, the primary motive is to defraud people out of their money.

(5) Overseas futures refer to futures trading conducted on exchanges located outside mainland China. Commonly traded futures contracts include products available on exchanges in countries such as the United States and the United Kingdom. Since overseas futures are not subject to domestic legal regulations, they are easily exploited by illicit actors, making them highly vulnerable to illegal trading activities.

(6) Individual stock options refer to the right granted to the option buyer—upon paying a certain fee to the seller—to buy or sell a specified number of particular stocks at an agreed-upon price within a predetermined time frame. Currently, China's domestic securities exchanges and futures exchanges have not yet launched individual stock option trading. Consequently, "over-the-counter individual stock option" platforms found online are mostly unlicensed, illegal entities that tout "high returns with low risks" to lure unsuspecting investors. Such activities constitute unauthorized securities, futures, and fund operations.

(7) Illegal futures trading refers to the unauthorized establishment of futures trading venues or the organization of futures trading activities through other means without approval from the State Council or the futures regulatory authority under the State Council, as well as the illegal establishment of futures companies or the unauthorized engagement in futures business in any other form.

(8) Illegal activities in the fund promotion field primarily include: first, when fundraising institutions and their practitioners promote private equity funds, they engage in public or disguised public promotion, use promotional materials containing false statements, promise guaranteed returns, exaggerate or present one-sided information, or unduly emphasize the limited time frame for concentrated marketing efforts; second, promotional activities involving "pseudo-private equity funds" and "pseudo-funds."

3. How to Prevent Illegal Securities, Futures, and Fund Activities

(1) Verify the authenticity of information

Investors can check and verify whether relevant institutions have obtained licenses to conduct securities and futures business (including securities and futures investment consulting services), whether personnel are qualified for their roles, and whether their activities comply with laws and regulations through the following channels: the websites of the China Securities Regulatory Commission (CSRC) and its local branches (www.csrc.gov.cn); the website of the Securities Association of China (www.sac.net.cn); the website of the China Futures Association (www.cfachina.org); the website of the Asset Management Association of China (www.amac.org.cn); as well as the official consultation channels provided by securities, futures, and fund management institutions.

(2) Refuse the Temptation of Excessive Interest

Investors looking to avoid falling into traps set by illegal securities, futures, and fund activities should firmly remember the "Three Musts" and "Three Don'ts": 1. Be rational—don’t rely on luck. Instead, carefully consider whether you truly understand the product and market conditions, whether it aligns with market principles, and whether your financial resources can withstand potential risks. 2. Stay steady—avoid taking unnecessary risks. Not only should you realistically assess your own risk tolerance, but also steer clear of impulsive decisions that could lead to being deceived. 3. Stay vigilant—don’t act blindly. Always purchase financial products or services through legitimate channels, resist following trends without thinking, and stay immune to the lure of excessively high returns.

(3) Choose Legal Trading Platforms

Investors can only buy and sell stocks through legally established securities trading venues; engaging in stock transactions at illegally set-up venues or institutions is strictly prohibited. Recently, there have been frequent cases of criminals using channels such as phone calls, WeChat, QQ, and Douyin Video Accounts to impersonate legitimate securities firms and their staff, carrying out fraudulent activities. In general, when encountering securities sales departments or customer service representatives with unclear origins, investors should ask them to present relevant business licenses, professional qualifications, and other credentials. Additionally, investors are advised to verify the authenticity and legality of the information by checking official websites such as the China Securities Regulatory Commission and the China Securities Industry Association, thereby safeguarding themselves against fake securities firm customer service personnel, analysts, trading software, and official websites—and avoiding falling victim to scams altogether.

(4) Learn More About Anti-Fraud Information

Investors can visit the China Securities Regulatory Commission’s website—specifically the Illegal Securities and Futures Risk Alert section (http://www.csrc.gov.cn/csrc/c106299/common_list.shtml)—as well as the China Securities Industry Association’s website, in the Anti-Illegal Activities section (http://www.sac.net.cn/wlzf/tzzfxts/), to learn about investor risk alerts, publicized information on illegally imitated institutions, lists of legitimate securities firms, and updates along with real-life cases. This will help investors enhance their ability to identify illegal securities, futures, and fund activities, enabling them to stay clear of traps set by unregulated entities.