Illegal securities and futures activities refer to activities that are conducted without approval and should be approved or authorized by the securities regulatory authorities or departments authorized by the State Council, and should be subject to statutory supervision for the issuance of securities and the operation of securities and futures business. Illegal securities and futures activities are characterized by their wide scope, strong deception, significant harm, and rapid spread, making them a cancer in economic and social life, seriously endangering social stability and financial security. Small and medium-sized investors must pay attention to preventing illegal securities and futures activities to protect their property safety.

The main manifestations of illegal securities and futures activities include the following: First, fabricating false information that a company is about to be listed domestically or abroad or that stock issuance has received government approval, deceiving the public into purchasing so-called "original shares"; second, illegal intermediary institutions, under the names of "investment consulting institutions," "property brokerage companies," or "foreign capital companies or investment companies' representative offices in China," illegally buy or sell or act as agents for the sale of unlisted company stocks to the public without legal approval; third, criminals use securities investment as a guise, luring the public with high returns to defraud them of their money. In recent years, as regulatory authorities have intensified their crackdown, criminals have continuously innovated their methods of engaging in illegal securities and futures activities, and investors need to be careful in identifying and preventing falling into these traps.

Illegal securities and futures activities are a typical type of crowd-related illegal crime that severely disrupts normal economic and financial order and undermines social harmony and stability. Criminals often use false identities and information, exaggerate publicity, promise returns, and use various forms of cover to lure investors into being deceived. After defrauding investors of their money, criminals often squander it immediately or flee, making it difficult for investors to recover their losses.

1. Look at the business qualifications.The securities and futures industry is a licensed industry. According to regulations, conducting securities and futures business requires approval from the China Securities Regulatory Commission (CSRC) and obtaining the corresponding business qualifications. If you want to know whether a company is authorized to publicly issue securities, you can check the administrative licensing information section on the CSRC website (www.csrc.gov.cn). You can also log on to the Shanghai Stock Exchange (www.sse.com.cn), Shenzhen Stock Exchange (www.szse.cn), or Beijing Stock Exchange (www.bse.cn) websites to check specific information about new stock issuances. If you want to know whether a company or individual has the qualifications for securities and futures business, you can check the CSRC website or the websites of the Securities Association of China (www.sac.net.cn) and the China Futures Association (www.cfachina.org).

2. Look at the marketing methods.When conducting securities and futures business activities, it is necessary to comply with the requirements of investor suitability management in securities and futures laws and regulations. Legal securities and futures operating institutions generally use cautious language in their business promotion and will not exaggerate or falsely advertise, while also fully disclosing business risks as required. However, criminals often exploit investors' psychology of wanting to "get rich overnight" or being eager to turn losses into profits, using exaggerated, sensational, or eye-catching promotional language, often claiming to be "teachers" or "stock gods," attracting investors with phrases like "buying leads to limit up," "recommending dark horses," "providing insider information," "guaranteed profits," "guaranteed listing," "one-on-one expert guidance," and "connecting with private placements." Securities and futures investments carry risks, and it is impossible to guarantee profits.

3. Look at the remittance account.Generally speaking, the purpose of illegal securities and futures activities is to defraud investors of their money and obtain illegal gains. To achieve this goal, criminals often use various sales tactics, such as discounts, promotions, frequent payment reminders, and creating a sense of urgency, urging investors to quickly transfer funds to bank accounts under their control. Legal securities and futures operating institutions can only conduct business in the name of the company and can only open bank accounts in the company's name; they will not use personal accounts or accounts not belonging to the institution for receiving payments. Investors should be particularly cautious during the remittance process; if the receiving account is a personal account or does not match the name of the institution, investors should not remit funds to it.

4. Look at the website URL.The URLs of illegal securities and futures websites often consist of letters and numbers without special significance, or they change or add letters and numbers based on the URLs of legal securities and futures operating institutions. Investors can check the URLs of legal securities and futures operating institutions through the CSRC website or the websites of the Securities Association of China and the China Futures Association, and should not log into illegal securities and futures websites to avoid falling into traps and suffering losses.

Scam 1: Impersonating legitimate institutions or personnel.

Main methods:Criminals use websites, apps, WeChat, and other channels to impersonate legitimate securities companies, fund companies, or their partners. Some even set up counterfeit websites and fake institutions, publishing false professional qualification certificates and professional teams, conducting illegal securities activities through account opening, stock recommendations, promising returns, collecting membership fees or guidance fees, and entrusted wealth management to deceive investors. They often require membership fees, consultation fees, service fees, etc., to be transferred to their designated accounts, especially personal accounts. In addition, there are criminals impersonating the CSRC or stock exchanges, committing fraud under the guise of compensating investors for losses.

Case:Criminals impersonated staff from a certain securities company, added clients as friends on WeChat, and then sent them the latest trading software from that securities company, introducing the latest software that supports free ten-level market data and offers rate discounts. Investor Wang was attracted by the free and discounted features, so he downloaded the software and registered. During the bank card binding process, under the guidance of the "staff member," he conducted a bank-securities transfer, and after the operation, his account balance became 230 yuan, with the funds disappearing. Wang immediately contacted the "staff member," but by then he had been deleted from WeChat. Upon investigation, it was found that the trading software app was a counterfeit app impersonating a securities company, using an app with the same logo as the official software of the securities company to commit fraud.

Scam 2: Experts offering free stock recommendations.

Main methods:First, criminals use WeChat (public accounts, friend circles, adding friends), Weibo, forums, stock bars, QQ, etc., with exaggerated promotional phrases like "big data stock diagnosis," "recommending dark horses," "one-on-one expert guidance," and "no profit, no charge," or boast about past stock trading "performance" to attract members or clients. Second, after investors join WeChat groups, QQ groups, or online live rooms, individuals claiming to be "teachers," "experts," "stock gods," or "old masters" offer to teach stock trading experience and skills, but in reality, they illegally recommend stocks to investors to profit through "tips fees," "training fees," or sharing profits. Some criminals first recommend stocks for free and then take the opportunity to invite investors to join "internal VIP groups" or "VIP live rooms," claiming that more professional "teachers" provide higher-end services, charging high service fees under various names. These so-called "experts" do not possess qualifications for securities investment consulting.

Case:Zhao claimed to be a senior "stock guru" and "private equity ace trader", asserting that he had worked at several well-known securities firms. He posted screenshots of stock accounts on various websites and blogs to boast about his profitable trades, and bragged about obtaining investment information on doubling stocks through internal channels to lure investors into contacting him. Zhao recruited employees and instructed them to guide investors in buying and selling stocks through QQ groups, text messages, and selling stock software, collecting over 8 million yuan from investors under the guise of "guidance fees, consultation fees, service fees, and membership fees", resulting in severe losses for the investors.

Scam Technique Three: The "Pig Killing Plate" Behind Stock Recommendations in Live Broadcasts

Main methods:Individuals or institutions open live broadcast rooms on online platforms, becoming "anchors", "broadcasters", or "circle leaders", posing as "stock gods", "big V's", or "teachers", claiming to have a senior investment background and miraculous practical results. They use terms like "expert guidance", "big shots watching the market", and "famous experts discussing stocks" to promote and lure investors into recharging and purchasing virtual currencies or gifts on the platform, such as "gold coins" and "flowers", and continuously charge investors through various projects like "live broadcast subscriptions", "paid articles", and "paid Q&A". They even use real-time calls in the live broadcast room to direct investors to buy and sell stocks simultaneously, engaging in deceptive stock recommendations for large sell-offs, tricking investors into buying at high prices, leading to significant losses when stock prices plummet the same day, and are suspected of fraud, manipulating the securities market, and illegal stock recommendations (illegal operations) among various criminal activities.

Case:In September 2020, a gang recruited a large number of investors through multiple WeChat groups of 500 people to conduct "live stock recommendation" activities in a financial live broadcast room, claiming that a certain stock had at least three price limits left, encouraging a large number of investors to buy the stock at the limit price. Over a hundred investors believed the "live big V's" misleading statements and bought the stock at the limit price, only to see it hit the limit down for three consecutive days, resulting in heavy losses. The gang did not possess the qualifications for securities investment consulting and had many "stooges" lurking in QQ and WeChat groups boasting about achieving high profits under the recommendation of "stock recommendation experts", exaggerating their financial strength to lure investors into a certain financial live broadcast room. In the live broadcast room, they used enticing language to guide investors to use their own securities accounts to buy stocks at high limit prices, causing significant losses for investors and suspected of manipulating the securities market.

Scam Technique Four: Bait of "Professional Institutions" and "Insider Information"

Main methods:Criminals use WeChat, Weibo, blogs, QQ groups, stock forums, short videos, etc., to defraud investors through pre-prepared "scripts", falsely claiming to be "private equity funds", "professional institutions", or "insider information" to recruit members or clients, charging membership fees, consultation fees, or service fees; some even claim to provide stock information and trading timing to achieve high returns, charging high fees or commissions.

Case:Investor Zhang received a call at home from someone claiming to be from a well-known domestic private equity fund company, stating they had a lot of insider information and that experts were responsible for trading, guaranteeing profits. After paying a certain fee to the institution, the investor could receive stock trading information in advance via WeChat or phone. The fees paid by the investor ranged from 15,800 yuan to 58,800 yuan. Zhang browsed the company's website as introduced and saw many stock research reports and market analyses published on the site, feeling that the company was very professional, and agreed to accept the company's consulting services and paid the service fee. In fact, the company was just a shell company and did not have the qualifications for securities investment consulting, and Zhang's service fee was also wasted.

Scam Technique Five: Promising High Returns Through Illegal Wealth Management

Main methods:Criminals use portal websites, financial websites, forums, stock forums, blogs, Weibo, WeChat, and other new media as marketing platforms to openly recruit clients, often attracting investors to participate in entrusted wealth management through forms like "promised returns", "profit sharing", and "managing trades". Although investors cannot verify the legality of their entrusted wealth management, they still sign so-called "entrusted wealth management agreements" under the temptation of high returns, and after paying the investment funds, most are unable to recover their investments or suffer significant losses. In fact, these scammers generally operate by reversing the operations of multiple deceived investors' accounts with their own accounts to obtain illegal profits, and even illegally occupy investors' assets.

Case:Investor Wang received a call from a consulting company, where the salesperson claimed that the company was a professional securities investment company that could recommend stocks for investors to operate themselves, with profits split 70-30. With a try-it-out mentality, Wang agreed to cooperate with the company, making 10,000 yuan on the first stock, and sent 3,000 yuan to the company as agreed. However, the subsequent recommended stocks continuously fell, and when Wang tried to contact the company's salesperson for an explanation, the phone was no longer reachable, resulting in significant economic losses for Wang.

Scam Technique Six: Selling Magical Stock Trading Software

Main methods:Under the guise of selling securities consulting software tools, terminal devices, or after-sales service and technical training, they engage in securities investment consulting business in disguise. Criminals often exaggerate the capabilities of "stock recommendation software" when promoting it, boasting about the "magical" functions of the software, and even claiming that one can join the company and become a member to receive expert guidance on how to do well in stocks, achieving their goal of deceiving investors.

Case:Li saw a promotion for a stock trading software on a website, claiming it could accurately reveal stock buying and selling points. The hotline operator on the website enthusiastically introduced the trading performance of the software, insisting that by purchasing the software and becoming a member, stock information would be provided, guaranteeing profits. Li, anxious due to recent market fluctuations and being stuck in stocks, hurriedly spent 5,000 yuan to purchase the software, which had a usage period of three months. However, soon after, Li found that the actual performance of the software was vastly different from what was claimed, and requested a refund from the company. The company then offered to extend the service for free for three months and recommended stocks with insider information. Subsequently, Li ended up buying high and selling low each time, not only failing to make money but also falling into severe losses. Upon investigation, the company had no qualifications for securities investment consulting and was actually engaging in illegal investment consulting activities by selling stock recommendation software.

Scam Technique Seven: Inducing Participation in New Investment Varieties

Main methods:After the recommended "hot stocks" fail, criminals recommend new investment products such as foreign exchange, precious metals, oil, postal currency cards, and bulk commodities, or overseas indices, using reasons like "poor stock market conditions" and "low stock trading profit margins". They claim that these new investment varieties have characteristics of low investment, high returns, and flexible trading, making them suitable for ordinary people to invest in or to combine with stocks. "Stooges" in WeChat and QQ groups disguise themselves as investors, uploading screenshots of trading profits, boasting about substantial gains, and luring other investors to download trading software or apps, register accounts, and deposit funds to participate in trading.

Case:In such cases, most of these new varieties implement leveraged trading, with some leverage reaching dozens or even hundreds of times. A slight fluctuation in the market can lead to significant losses; some trading platforms or their business institutions guide investors to trade frequently through methods such as "calling orders," earning high commissions; some platforms deliberately call orders in the opposite direction, causing investors to quickly incur losses and face liquidation; some platforms require additional funds under the pretext of changing to a "senior teacher" to help investors recover losses, further exacerbating the losses; some, after investors' funds are nearly exhausted and they realize they have been deceived, immediately block or kick investors out of the group chat. Some of these trading platforms are betting against investors, where the losses of investors become the income of the trading platforms and their members, marketing personnel, etc. Some trading platforms engage in virtual trading, with their trading charts (K-line charts) replicating past market conditions from overseas, manipulated by criminals through the backend. Once investors participate in trading, they mostly end up losing all their capital.

Scam Technique Eight: "Membership Upgrade" and "Supplementary Payment Refund" Chain Scams

Main methods:After criminals recommend stocks that cause investors to incur losses, they take advantage of the awkward situation where investors are already at a loss, using various "talking points" to entice investors to join higher-level membership groups and pay more "membership fees," resulting in increasingly larger losses for investors.

Case:Investor A paid 5,000 yuan in membership fees to become a member of a certain investment consulting company. For three months, the stocks recommended by the company's "Teacher Wang" were all in a state of loss. One day, Investor A received a follow-up call from the company, where the follow-up personnel claimed that all the stocks recommended by the company were limit-up stocks and that they would thoroughly investigate A's losses. Two days later, A received a call from someone claiming to be a "director," who said that to compensate for A's losses, the company would upgrade A to a senior member at a discounted price. By paying an additional 8,000 yuan, A could enjoy the benefits of a 38,868 yuan senior member, with personal guidance on stock trading, guaranteeing a return of over 50%. In order to recover previous losses, A transferred another 8,000 yuan to the company, thinking they could recover their losses, but afterwards, no one answered the phone. A then realized that they had been scammed repeatedly and had fallen into the trap of an illegal investment consulting organization.

Scam Technique Nine: False "Original Shares," "Transfer to Main Board Listing," "Overseas Listing"

Main methods:Criminals use concepts like "Science and Technology Innovation Board," "Growth Enterprise Market," and "Nasdaq" to hype up, falsely promoting and fabricating materials under the guise of "original shares," "transfer to main board listing," and "overseas listing," creating the illusion that a company is about to go public, enticing uninformed individual investors to purchase so-called "original shares"; some companies sell "original shares" while promoting products, promising high dividend ratios, attracting a large amount of public funds.

Case:1. Su joined a WeChat group recommended by staff from Company B, and was very interested in the limit-up stocks recommended daily in the group. The staff from Company B recommended Su to purchase original shares of H Company on the New Third Board, claiming that these original shares would IPO within three months, and there would be several limit-up boards after listing. Believing the hype, Su transferred 750,000 yuan to H Company shareholder Li to purchase 50,000 shares of "H Company stock." After the transfer, Su was kicked out of the WeChat group. Six months later, Su received a call from the police, only to find out that the money transferred had not been converted into H Company stock but had been occupied by others. 2. One day, a woman added Xiao Gang as a friend on WeChat. During a casual chat, the woman claimed that her uncle was a leader at a securities exchange and had insider information, knowing that a certain company was about to transfer from the New Third Board to the main board, predicting that the company's stock price would definitely rise significantly after listing on the main board. Xiao Gang thought this was a great opportunity and asked how to purchase the company's stock. The woman then "half-pushed, half-encouraged" helped Xiao Gang solve the qualification to purchase New Third Board stocks and connected him with a shareholder of the company. After several negotiations, they happily traded 800,000 shares at a price of 15 yuan per share, worth 1.2 million yuan. Xiao Gang later felt something was off and personally called the company to inquire. The company's board secretary informed Xiao Gang that the current stock value was only 1-2 yuan, and the company was suffering heavy losses and would soon delist from the New Third Board. Xiao Gang then realized he had been scammed.

Scam Technique Ten: Selling "Investor Education" and "Stock Trading" Courses

Main Techniques: Criminals promote "investor education" courses to investors through phone calls, adding WeChat friends, etc., which include explanations of stock knowledge, market analysis and predictions, teaching stock trading techniques, recommending stocks, and guiding buy/sell points, with prices ranging from hundreds to tens of thousands of yuan. The more expensive courses offer "teacher" stock recommendation services and "hands-on guidance" through live broadcasts. On the surface, it seems to be popularizing financial knowledge and teaching stock trading techniques, but in reality, it is engaging in illegal securities investment consulting activities. After investors purchase the "investor education" courses, they are asked to download their stock trading software, open accounts within the software, and transfer funds for trading according to the "teacher's" guidance, but while it is easy to deposit, it is difficult to withdraw, making it hard for investors to get back their principal.

Case: Li Si received a sales call promoting an online course for a certain securities investor education seminar, claiming that the course could be attended for free. After adding the caller on WeChat, Li followed the link provided to enter the investor education seminar page, where teachers shared stock investment experiences and techniques. After attending a few classes, Li felt the results were good, and the staff further persuaded Li to spend money to upgrade to a higher-level course. The courses were divided into several levels, with the lowest entry-level course costing 199 yuan, including services like "K-line introductory course," while the high-level course costing 29,900 yuan included "dynamic analysis system" and individual stock recommendation services. Li decided to go straight for the high-level course, strictly following the daily stock recommendations and trading times provided by the teacher. However, after two months, the losses outweighed the gains, and the stocks recommended by the once-miraculous "teacher" kept falling, resulting in heavy losses.