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I. Illegal problems discovered by official inspections

In p>215, the CSRC organized forces to conduct on-site inspections on more than 14 private fund managers and private fund sales organizations, and found that there are the following illegal problems and even illegal fund-raising crimes in the current private fund field.

1. The registration information is distorted. Private equity fund management institutions and private equity fund registration information is incomplete, untrue, not updated in time, and periodic reports and major changes are not submitted as required.

2. The fund-raising behavior is illegal. Raising funds from unqualified investors, lowering the threshold of investors in disguise, publicly raising funds from unspecified objects, exaggerating or false propaganda, illegally protecting capital and income, and the number of investors exceeding the quorum limit.

3. The investment operation is illegal. Misappropriate or occupy the fund property, hotchpot the inherent property with the fund, charge expenses in violation of the contract, transfer benefits, etc.

II. Criminalization of illegal issues

Private placement funds originally belong to normal financial investment and financing methods, and their operation should comply with legal procedures according to the law, otherwise, it is illegal private placement. Illegal private placement is light, illegal compensation is heavy, and criminal offences are typical crimes, including the crime of illegally absorbing public deposits and the crime of fund-raising fraud.

In reality, due to the vague boundary between private placement and illegal fund-raising, it is often easy to cause misunderstanding, and then the original private placement fundraiser becomes a criminal who illegally raises funds. Nevertheless, the two are not inseparable, and I think they can be identified from the following aspects.

1. Whether to offer publicly. Private equity funds, as the name implies, can only raise funds from specific targets privately, but not from the public like Public Offering of Fund. Therefore, some methods of public offering are strictly prohibited in private equity funds. For example, you can't promote it through newspapers, radio, television, the Internet and other public media, and you can't promote it to unspecified people through leaflets, SMS, WeChat, blogs and emails. In practice, financial lectures, investment seminars and other publicity forms virtually push the fundraising behavior of private equity funds to the brink of crime, and fund companies should be cautious. If the relevant institutions adopt the above-mentioned ways to publicize and promote to the public, it may touch the boundary of illegally absorbing public deposits.

2. Whether to register or not. Legitimate private equity funds and their management institutions shall be registered with the industrial and commercial administration, and shall be registered with asset management association of china in accordance with the Measures for the Registration of Private Equity Fund Managers and the Filing of Funds (Trial). Illegal fund-raising refers to the absorption of funds without the approval of relevant departments according to law or in the form of legal operation. Therefore, it is one of the key factors for private equity funds to set up a fund and register it for the record.

To sum up, illegal fund-raising in the field of private equity funds has the following characteristics: generally, public publicity and promotion are used to lure investors; The target of fundraising is generally the public; There is generally no minimum investment threshold, or the threshold is very low; There is no upper limit for the number of investors, and the more the better; Generally, there is no investment risk warning, and high returns are promised.

III. Prevention of Illegal Issues

On May 26, 215, asset management association of china and Beijing Supervision Bureau of China Securities Regulatory Commission jointly issued the Notice on Launching a Special Rectification Action against Illegal Fund Raising in the Name of Private Equity Investment Fund in Beijing, which was countersigned by the Private Equity Department, Insurance Bureau, Inspection Bureau and Illegal Bureau of Securities Regulatory Commission, and released together with Beijing Bureau with the approval of Securities Regulatory Commission, although the title was titled "Launching Activities against Illegal Private Equity in Beijing".

what behaviors are illegal behaviors of private equity funds? It can be seen that private placement is not a simple matter, and enterprises will be in the ranks of illegal crimes with a little carelessness. In view of these possible illegal and criminal acts, we can't wait until there are problems before we manage them, but we need to prevent them fundamentally. There are many ways to prevent illegal activities of private equity funds. If you have any questions, you can consult senior lawyers in related fields.