Private equity investment funds (hereinafter referred to as private funds) refer to investment funds established within the territory of the People's Republic of China by raising funds from investors in a non-public manner. Private equity funds are organized in contract, corporate and partnership.

In recent years, China's private equity industry has developed vigorously and has become an important force supporting the development of multi-level capital markets, but risk events such as illegal fundraising, payment crisis, illegal publicity, and violation of the investor suitability system have also begun to emerge. Among them, in the name of financial innovation, cases of breaking the bottom line standard of qualified investors in disguise have emerged one after another. Since the CSRC's Interim Measures for the Supervision and Administration of Private Investment Funds (hereinafter referred to as the "Private Placement Measures") clearly stipulates the criteria for qualified investors of private equity funds, that is, they have the corresponding risk tolerance and risk bearing ability, and the amount invested in a single private equity fund is not less than 100 million yuan, etc., some companies have adopted various methods to try to break through the relevant standards for qualified investors in order to circumvent regulatory requirements.

Take the case of investor Wang as an example. In 2014, a fund company sold a limited partnership fund product to Wang, and Wang paid up only 30,100 yuan, and the amount invested in a single private equity fund was less than 3 million yuan. The fund company's act of raising funds from non-qualified investors violated Article <> of the Private Placement Measures, which stipulates that "private equity funds shall raise funds from qualified investors", and the CSRC decided to give a warning and impose a fine of <>,<> yuan.

There is also a typical case of circumventing the qualified investor standard through the concept of "split transfer of income rights" in private equity products. "XX Bao" is an Internet financial platform that provides so-called "transfer of income rights" services through its website, APP and other forms. The specific model is that Company C, the operator of "XX Bao", purchases relevant private equity products as a qualified investor through its wholly-owned holding Company D; Then, after Company D splits the income rights of the private placement products it holds, it transfers them to registered users through "XX Bao", and the registered users can also transfer the income rights to other registered users through "XX Bao". The investment threshold set by "XX Bao" is 1000,1 yuan (fixed income) and <>,<> yuan (equity) respectively. In addition, according to the Agreement on Transfer of Income Rights signed by Company D and the investor, the risks and benefits of private placement products shall be borne by the transferee, that is, the investor, after the transfer. Later, a CSRC found that Company C violated the provisions of the Private Placement Measures, constituting illegal acts such as carrying out private placement business to non-qualified investors, illegally transferring shares of private equity products such as private equity funds, and the number of investors of a single private equity fund exceeding the statutory upper limit, and took administrative supervision measures against Company C, its legal representative and relevant management personnel in accordance with the law. Many of the investors involved in this case also suffered losses to varying degrees, and the case also triggered a number of investor complaints.

Private equity fund products have high-risk attributes and require investors with certain risk identification capabilities and bearing ability to purchase them. In the above case, the relevant investors took on risks beyond their own capabilities. For example, Wang only contributed 30,100 yuan to purchase a private equity fund product with an investment threshold of <> million yuan; In Case <>, after the split and transfer of the private placement product, the risks were transferred to the investors. It can be said that the above behaviors have lowered the threshold for qualified investors, allowing some investors with weak risk identification capabilities and risk-bearing abilities to bear risks that they should not bear.

Through the above cases, investors are reminded to pay attention to the following issues:

First, we must do what we can. Private equity investment has the characteristics of high risk, and requires investors to identify risks and tolerate risks. The Private Placement Measures also clearly stipulate the requirements for qualified investors of private equity funds, in addition to the investment amount of a single private equity fund not less than 100 million yuan, the net assets of the unit shall not be less than 1000 million yuan, the personal financial assets shall not be less than 300 million yuan, or the average annual income of individuals in the past three years shall not be less than 50,<> yuan. Investors should proceed from their own reality, do what they can, judge whether they can invest in private equity fund products according to the standards of qualified investors of private funds, and then choose products that match their risk tolerance on the premise of meeting the standards of qualified investors.

Second, it is necessary to find out the details. Only private equity fund managers legally registered with the Asset Management Association can raise funds from qualified investors. Investors are advised to check whether the fund association has registered with the fund association through the fund association website (www.amac.org.cn) before purchasing private equity products, and should not purchase through illegal channels. At the same time, it can also learn about the past performance, market reputation and integrity norms of private equity fund managers.

Third, look at the contract carefully. A fund contract is an important instrument that stipulates the rights and obligations between investors and private fund managers. It is recommended that when viewing the contract, investors should pay attention to whether the contract complies with the "Guidelines for Private Investment Fund Contracts" issued by the Asset Management Association, pay attention to whether the rights and obligations stipulated in the contract are reasonable, whether the contract is complete, whether there are abnormal situations such as missing pages and missing pages, carefully read the terms, and require the fund manager to explain or explain concepts and vague expressions that they do not understand, and do not be fooled and deceived by various exaggerations and false publicity. For contracts in duplicate, it should also be checked that the contents of each contract are exactly the same. In addition, we should be especially wary of illegal fund raising similar to Company C in Case 2, which is cloaked in "financial innovation". When purchasing financial products through the Internet platform, investors should carefully read the relevant product introductions to understand whose products they are buying, who they are signing contracts with, where the funds are transferred and where they are specifically invested. If any abnormality is found, the fund industry association or regulatory department should be consulted in time.

Fourth, we must continue to pay attention. After subscribing to private fund products, investors should continue to pay attention to the investment and operation of private fund products, and require private equity fund managers to perform information disclosure obligations as agreed. If investors find that the manager has lost contact, the fund property has been embezzled or misappropriated, and the fund has major risks, etc., they should promptly report to the securities regulatory bureau or fund industry association where the private fund manager is registered; If it is discovered that a private fund manager is suspected of fraud, illegal fundraising or other criminal clues, it must promptly report the case to the public security and judicial organs.

Fifth, we should regularly study private equity knowledge. The development of Internet technology has made financial business constantly innovate. When investors participate in high-risk investment businesses such as private equity funds, they should also regularly learn relevant knowledge, such as browsing the websites of regulatory authorities or fund industry associations, reading newspapers and magazines, etc. Carefully identify related businesses or products, do not be deceived by so-called innovative products and ultra-high returns, and remember that "what you value is the benefits of others, but what others worry about is your principal".