I. What Are Illegal Securities and Futures Activities?

Illegal securities and futures activities refer to acts that violate the Securities Law, Regulations on the Administration of Futures Trading and other applicable laws and administrative regulations. Without approval by competent authorities, such illegal acts include arbitrarily conducting public securities issuance, establishing securities trading venues or securities companies, setting up futures trading venues or organizing futures trading in other forms, founding futures companies and other futures operating institutions, engaging in securities businesses such as securities brokerage, securities underwriting and securities investment consulting, or carrying out futures businesses without authorization.

II. Main Forms of Illegal Securities and Futures Activities

(I) Illegal Securities Issuance

It is mainly manifested in the illegal issuance of stocks. Fraudsters lure investors into purchasing and transferring so-called "original shares" under the pretext of upcoming "domestic and overseas listings". Typical fraud characteristics include: tempting the public with promises of domestic and overseas listings and high returns; targeting the general public, especially middle-aged and elderly groups; and aiming to illegally occupy public funds.

(II) Illegal Securities Business Operation

It mainly covers illegal securities investment consulting and illegal brokerage businesses. As a common illegal act, illegal securities investment consulting is conducted by lawbreakers who set up websites or use social software and self-media platforms to recruit members and clients. By promising guaranteed profits and high returns, they illegally provide securities investment analysis, forecasts and recommendations, and charge fees for membership, consultation and services.

Illegal brokerage business refers to acts where unqualified institutions or individuals control trading accounts and sub-accounts, accept trading instructions and conduct transactions on behalf of investors, including off-market margin trading via sub-accounts and other illegal practices.

(III) Illegal Futures Business Operation

Lawbreakers forge fake futures trading platforms to induce investors to participate in futures trading. These counterfeit platforms involve no real trading activities and are connected with third-party payment channels. Victims’ funds are transferred to designated third-party payment institutions, laundered and finally diverted to personal accounts controlled by fraudsters, which is essentially a type of fraud.

III. How to Identify Illegal Securities and Futures Activities

1. Verify institutional qualifications

All securities and futures businesses (including related consulting services) must be approved by the China Securities Regulatory Commission (CSRC) with valid qualification certificates. Investors may check information on legitimate securities and futures institutions and practitioners via the official websites of the CSRC (www.csrc.gov.cn), the Securities Association of China (www.sac.net.cn) and the China Futures Association (www.cfachina.org), or verify relevant information with local securities regulatory bureaus.

2. Identify marketing tactics

Illegal operators often claim to be "investment mentors" or "stock experts", boasting access to insider information and the ability to pick profitable stocks to lure investors with guaranteed high profits. Legitimate securities and futures institutions are prohibited from such promotions. Securities and futures trading carries inherent risks, and risk-free profits are impossible. Risk disclosure is a mandatory regulatory requirement rather than a mere formality.

3. Check website domain names

Illegal securities and futures websites usually use meaningless combinations of letters and numbers, or modify and append characters to the official domain names of legitimate institutions. Investors can verify official website addresses through the regulatory and industry association platforms mentioned above, and check website filing information and server locations to identify irregular websites.

4. Examine payment accounts

Legitimate securities and futures institutions conduct business and open bank accounts only under their official corporate names. Investors shall remain vigilant during fund transfers. Any payment request directed to personal accounts or accounts inconsistent with the institutional name must be firmly rejected.

Formal Reminders

Enhance legal awareness and stay alert to illegal securities activities.

Resist the temptation of excessive returns and guard against traps of illegal securities activities.