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at 10 a.m. on september 11, the fengxian branch of the shanghai public security bureau issued a police report through its official wechat account. recently,according to law, an investigation was filed into haiyin wealth for suspected illegal fund-raising crimes.criminal compulsory measures were taken against han, han, wang and other suspects. it is understood that han and han correspond to the actual controller of haiyin wealth.han hongwei and han xiao, father and sonin the 2023 hurun rich list, han hongwei and his son han xiao are still on the list with a net worth of 6 billion yuan.

on the evening of september 11, rock shares (600696) announced thatafter verification, haiyin wealth management co., ltd. was investigated for suspected illegal fund-raising crimes. criminal coercive measures have been taken against the company's actual controller han xiao, and all his shares in the company have been frozen by the court.

an investor who subscribed to haiyin wealth's financial products told reporters that many haiyin investors had already anticipated this result.

"since haiyin wealth stopped product redemption in december last year, investors have been waiting for haiyin wealth to come up with a feasible redemption plan. however, while haiyin wealth's management team said that they were serious about redemption, they also offered overvalued real estate and liquor projects as redemption products, which investors were not very satisfied with," he told reporters. although some investors had to sign the so-called redemption intention agreement to "stop losses", most investors refused.

reporters learned that the relevant departments' investigation into haiyin wealth's suspected illegal fund-raising crimes may also be related to previous media reports.

in may this year, some media reported that a large number of underlying assets of haiyin wealth's wealth management products were completely fabricated and fictitious, and the whereabouts of most of the funds raised were unknown. nearly 50,000 high-net-worth users were fooled, involving a scale of up to 70 billion yuan.

it is worth noting that due to the impact of haiyin wealth’s deep repayment default crisis, the share price of its listed company in the united states, haiyin holdings, has been falling this year.

as of 15:00 on september 11, the share price of hywin holdings (hyw.nasdaq) was only us$0.3689 per share.

on june 6, haiyin holdings announced that it had received a notice letter from the staff of the listing qualification department of the nasdaq stock market, inc. on june 4, 2024. it indicated that the company did not meet the minimum market value of publicly held shares ("mvphs") requirements stipulated in section 5450(b)(3)(c) of the nasdaq listing rules because the company's mvphs was less than us$15 million for 30 consecutive trading days.

pursuant to nasdaq listing rule 5810(c)(3)(d), hywin holdings has a compliance period of 180 calendar days, or until december 2, 2024, to regain compliance with the minimum mvphs requirements. if hywin holdings does not regain compliance with the minimum mvphs requirements by december 2, the company will receive written notice that its securities will be delisted, as determined by nasdaq staff.

the above-mentioned investors believe that as relevant departments investigate and punish the haiyin wealth management team, there are many variables in how haiyin holdings can get rid of the risk of delisting.

"earlier, haiyin wealth's management told us that if haiyin wealth's business transformation successfully drives haiyin holdings' market value back up, haiyin wealth will cash out haiyin holdings' shares to replenish repayment funds. now it seems like a mess," he said bluntly.

criminal compulsory measures taken against actual controller

rock shares: all shares held have been frozen

rock shares announced on the evening of september 11 that according to the police report,after verification, an investigation was launched into haiyin wealth management co., ltd. on suspicion of illegal fund-raising, and criminal coercive measures have been taken against the company's actual controller han xiao.

the announcement stated that han xiao was temporarily unable to perform the duties of the company's chairman, general manager and secretary of the board of directors. according to the relevant provisions of the "company articles of association", "if the chairman is unable to perform his duties or fails to perform his duties, the vice chairman shall convene and preside over the meeting", so the company's vice chairman chen qi will temporarily perform the duties of chairman and secretary of the board of directors.

on the same day, yanshi co., ltd. disclosed the "announcement on the judicial freeze of shares of the controlling shareholder and its concerted actors", stating that the controlling shareholder shanghai guijiu enterprise development co., ltd. and its concerted actors held a total of 216,740,245 shares of the company, which had all been frozen by the court.it accounts for 64.80% of the company's total share capital. the judicial freezing of the shares of the above-mentioned shareholders is related to the investigation into haiyin wealth co., ltd. on suspicion of illegal fund-raising crimes.

rock shares said,since all the shares held by the actual controller of the company have been frozen by the court,the company is actively communicating with relevant government departments to form a new governance structure. during the transition period, the company will form an operating committee to perform the duties of the general manager and jointly decide on the company's business development.

in addition, as of the date of disclosure of this announcement, the company has not received any notice from relevant authorities requiring the company to assist in investigations. the company's other directors, supervisors and senior management personnel are performing their duties normally, and the board of directors is operating normally. the above matters will not have a significant impact on the company's normal production and operations.

according to information, shanghai guijiu co., ltd. is a wine management group that integrates production, supply and marketing, integrates classics and innovation, and focuses on the sauce-flavor liquor track. the company's brand series include tianqing guiniang series, jundao guiniang series, gaojiang series, junxing series, seventeen light years series, etc.

according to the 2024 semi-annual report, in terms of shareholders, shanghai guijiu enterprise development co., ltd. and wuniu equity investment fund management co., ltd. are the first and second largest shareholders of yanshi co., ltd., respectively, holding 42.88% and 13.57% of the shares.

according to the 2023 annual report of yanshi co., ltd., han xiao was born in may 1989 and holds a bachelor's degree. during the reporting period, he served as executive director of shanghai guijiu enterprise development co., ltd.; executive director of wuniu equity investment fund management co., ltd.; director and chairman of the company's 10th board of directors. on march 22, 2024, han xiao was appointed as the general manager of yanshi co., ltd.; on june 6, han xiao served as the secretary of the company's board of directors.

in the secondary market, as of the close of september 11, rock stocks fell 6.91%, with the share price at 7.28 yuan, and the latest market value was 2.4 billion yuan. as of june 30, the total number of rock stocks shareholders was 23,800.

long and fruitless "repayment" negotiations

according to data, haiyin wealth was established in the core area of ​​lujiazui, shanghai in 2006. haiyin holdings' 2023 fiscal year financial report shows that as of june 30, 2023, haiyin wealth has 185 wealth management centers in 91 cities across the country, 1,749 financial planners, and 46,627 active customers.

it is generally believed thathaiyin wealth manages a total of approximately 70 billion yuan of funds from high-net-worth investors.

"even when haiyin wealth suddenly suspended product redemption in december last year, the amount of funds they failed to redeem was at least tens of billions." this investor believes that the sudden suspension of product redemption has also caused some investors to doubt the authenticity of the underlying assets of haiyin wealth's wealth management products. earlier this year, some investors went to inspect the underlying assets of certain wealth management products and found that they were "inconsistent" with the investment directions of the funds marked on the wealth management products.

this has caused more and more investors to doubt haiyin wealth's ability to repay, and some investors are even certain that haiyin wealth is involved in "fund pool" and "self-financing" businesses.

in may, a media report said that reporters spent more than two months conducting on-site investigations in eight provinces and cities, including zhejiang, shanghai, shandong, and hubei, and found that all the wealth management products sold by haiyin wealth violated regulations.they also manipulated dozens of shell companies to build a "nested funding pool" with a scale of more than 70 billion yuan.

the media outlet further discovered through investigation that the underlying assets invested in this fund pool have generally shrunk significantly compared to the amount of funds raised by wealth management products. a large number of underlying assets have even been confirmed to be completely fabricated and fictitious, and the whereabouts of most of the funds raised are unknown.

"this made many investors very angry, and they asked relevant departments to investigate haiyin wealth," the investor recalled. during this period, haiyin wealth had been promoting its own repayment plans to investors, either using overvalued real estate projects for "debt repayment" or using its expensive liquor products for "repayment."

he even heard that haiyin wealth has always emphasized that after being audited by some institutions, the asset valuation of haiyin wealth can "cover" the amount that needs to be redeemed to investors, so investors are asked to wait patiently for the progress of haiyin wealth's asset monetization and fund redemption.

"i don't believe it," he told reporters. in may and june, a haiyin account manager approached him and recommended a property in a city in southern china for debt repayment, but he found that haiyin wealth's valuation of the property was more than 1 times higher than the local market price, so he decisively chose to refuse.

the investor said frankly that haiyin wealth had hardly contacted him again to discuss fund repayment. he and many other investors "no longer have confidence" in the repayment plan led by haiyin wealth, and hoped that relevant departments would intervene.

"some of our investors are mentally prepared. compared with haiyin wealth's so-called repayment plan to delay time, we hope that relevant departments can intervene and conduct a thorough investigation into how many underlying assets haiyin wealth actually has and whether there is any serious self-financing or fund pooling business." he told reporters that although this means that investors can only wait for relevant departments to reorganize or liquidate haiyin wealth's assets in order to get repayment from haiyin wealth, investors can feel more at ease with the intervention of relevant departments.

haiyin wealth's business transformation is "not optimistic"

the reporter noticed that after being caught up in a product redemption default storm in december last year, haiyin wealth has been committed to business transformation and "self-rescue" since this year.

on march 27, haiyin holdings announced a strategic business transformation plan. according to this new strategy, first, it will shift its financial services and product distribution business to public market funds and nav-based products; second, it will strategically promote the growth of its insurance brokerage services business; third, it will continue to grow and develop its overseas wealth management and asset management services; fourth, it will diversify its revenue by continuing to develop other non-financial services businesses such as high-end health management services and opportunistically expanding into consumer industries including the distribution of chinese liquor and other consumer products.

as part of its business transformation, haiyin holdings is carrying out a restructuring plan, which includes the elimination of certain positions and aggressive cost-saving measures, including the layoffs of approximately 300 mid- and back-office employees. as haiyin holdings is developing new sales policies and targets for its national relationship manager team, further layoffs of front-line employees may occur. in addition, as part of haiyin holdings' restructuring plan, haiyin holdings will simplify its regional management and consolidate its physical offices in china by focusing on certain key regions and cities.

however, the market has low confidence in haiyin wealth's business transformation. the reasons are that, first, haiyin wealth hopes to promote liquor, health management and other services to high-net-worth investors to achieve new business revenue, but due to the product default crisis, high-net-worth investors are dissatisfied with haiyin wealth, and there are still many variables to determine how much value the so-called customer synergy effect can generate; second, after laying off a large number of employees, there are also many variables to determine whether haiyin's liquor and health management businesses can develop rapidly.

the reporter learned that after the product repayment default storm broke out in december last year, haiyin wealth has lost many business backbones this year, resulting in challenges in the development of many businesses. in particular, the liquor business requires high marketing investment. only by establishing a good market reputation and marketing channels can revenue growth and business virtuous cycle development be achieved. however, haiyin wealth's financial situation makes it difficult for the company to make large investments in this regard.

haiyin holdings' financial report shows that as of june 30, 2023, haiyin holdings' cash and cash equivalents were rmb 868.9 million (us$120.3 million), which makes it very difficult to support the development of multiple businesses such as insurance brokerage, health management, and liquor.

previously, some regional distributors of shanghai guijiu, a subsidiary of haiyin holdings, came to "hold accountable" because shanghai guijiu failed to deliver on the promised returns on liquor sales.

the above-mentioned haiyin investors believe that this indicates that haiyin wealth’s business transformation is also unable to solve the challenge of repaying tens of billions of funds.

"at present, the intervention of relevant departments may be the best outcome. on the one hand, haiyin wealth is suspected of illegal fundraising, and relevant departments can investigate and punish criminals. on the other hand, the intervention of relevant departments may speed up the statistics of haiyin wealth's real underlying assets and the sale and liquidation of assets, so that investors can get back part of their investment principal as soon as possible." he said bluntly.

disclaimer: the content and data of this article are for reference only and do not constitute investment advice. investors who act accordingly shall bear their own risks.