REPUBLIKA.CO.ID, BEIJING -- Chinese officials on Monday defended their response to the failed Fanya Metal Exchange, which came under the spotlight last year following protests by angry investors who allegedly lost $6 billion, saying they reacted fast and responsibly.
Last July, hundreds of people protested outside the Fanya Metal Exchange in Kunming in southwestern Yunnan province, alleging the exchange had lost investments of more than 40 billion yuan ($6.14 billion) and complaining of government inaction.
Investors also held protests outside the offices of China's financial regulators in Beijing and Shanghai.
The Fanya case highlights rising risks posed to China's economy from its $2.6 trillion wealth management industry and the challenges it presents to regulators as well as potential threats to the ruling Communist Party's cherished social stability.
The head of the exchange was arrested last month, along with 15 other suspects.
Fanya, though privately-run, relied on the endorsement of the Yunnan provincial government to attract investors.
After irregularities first emerged last April, the Yunnan government supported the exchange, issuing a statement in June reassuring investors that it remained a legal entity engaged in legal operations.
Answering a question from Reuters on the sidelines of China's annual parliament meeting as to whether the government had failed investors, Kunming Mayor Wang Xiliang said authorities had done their job well.
"Under the strong leadership of the provincial party committee and government, we took vigorous measures, investigated in accordance with the law ... and protected the majority of investors' legal rights to the greatest extent," said Wang, reading from a handwritten pre-prepared statement.
Police have been carrying out an "energetic" investigation, arresting people, freezing and seizing assets and trying to "recover the investors' losses to the greatest degree", he added.
The probe is continuing and details will be announced in due course, Wang said.
Yunnan governor Chen Hao added that they had ensured the scandal had not "spread further" by mobilising officials to get involved to "clean up and rectify" the situation as soon as it happened.
"We have handled this with a high degree of responsibility towards consumers and investors."
The Fanya Metals Exchange was launched to increase China's control over the prices of several rare but important metals including indium and bismuth.
Prices for the metals traded on the exchange rose sharply and became out of sync with world prices.
Last April, investors placed a wave of sell orders, which the exchange later admitted caused liquidity problems. Looking to make good on the promise of instant redemption, investors wanted to switch their money into a stock market rally.
Ikuti Whatsapp Channel Republika