Differences of "fund pool" in criminal and civil cases

In the related field of financial technology, "capital pool" is a business model that many friends in the industry both love and hate. On the one hand, capital pool is an effective channel for financial institutions to invest in long-term projects with short-term funds, but on the other hand, the capital pool's Features can also easily lead to red line issues such as supervision and even illegal fundraising. Sister Sa's team hopes to use this article to sort out the concept and standards of the "capital pool" in the legal sense for your reference.

As the name implies, "fund pool" refers to institutions that pool funds together to form a pool of funds similar to a reservoir, which is a neutral concept. This centralized fund management model first originated from multinational groups and international banks, and has gradually been used by various financial institutions for a long time. Commercial bank wealth management products, trusts and funds are the representatives.

"Fund pool" is often mentioned in the judgments of criminal and civil cases. The former is mainly reflected in fund-raising criminal cases, and the latter is mainly used to prove the fact that institutions have collected funds. However, in the relevant regulations of the civil law department and the criminal law department, there is no direct identification of the "fund pool". The legal basis of the "capital pool" is mostly reflected in administrative regulations.

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After sorting out by Sister Sa’s team, there are two main valid legal bases for the constituent elements of a “capital pool”:

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The first is Article 9 of the Interim Provisions on the Operation and Management of Private Equity Asset Management Business of Securities and Futures Business Institutions.

The second is the second and third paragraphs of Article 3 of the "Notice of the General Office of the State Council on Relevant Issues Concerning Strengthening the Supervision of Shadow Banks".

Based on the content-zce of the above-mentioned legal provisions and the views of the academic community, the characteristics of the "capital pool" of Sister Sa's team are summarized as follows:

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Liquidity Risk

Institutions operating the "capital pool" business usually issue short-term wealth management products to invest in long-term projects, and obtain interest rate spreads through term and amount mismatches. However, once the term of short-term wealth management products is improperly arranged, it will be difficult to redeem and generate liquidity risks.

Correspondingly, Sister Sa's team believes that investing in short-term projects by issuing long-term wealth management products should not be included in the typical characteristics of the "capital pool" business because this model has more room for redemption fault tolerance and less liquidity risk.

Not separately accounted

Since the source and use of funds in the fund pool cannot be matched one-to-one, this has caused a mismatch between the risks and returns of the fund pool's wealth management products, allowing institutions to arbitrarily transfer earnings between different wealth management products.

In other words, arbitrary transfer of proceeds is a typical feature of the "capital pool" business model, while an issuance product model that cannot transfer proceeds arbitrarily should not be identified as a "capital pool".

Information anonymity

At present, the "capital pool" products of most institutions only indicate the general investment direction of funds when they are issued, and customers do not know the necessary information such as investment types, proportions, risks, deposits and profits of funds. The operating mode similar to the "black box" is one of the characteristics of the "capital pool". Furthermore, the mixing of client funds and the institution's own funds is also a feature that may appear in this operating mode.

The operation of the "capital pool" is not limited to similar financial institutions. Whether it is a rentable bicycle that once relied on deposit turnover, or a long-term rental apartment that was recently stormed by thunderstorms, its operation mode is similar to the "capital pool" business of financial institutions. , and has the ability to actually control funds.

What Sister Sa’s team needs to point out is that the existence of a “capital pool” business does not equate to legal risk—an institution’s ability to actually control the “capital pool” is the key to the qualitative nature of certain cases.

Taking the business model of the P2P platform as an example, in criminal cases involving fund-raising, client funds are not operated separately from the institution’s own funds, and there are even cases where the perpetrators misappropriate funds from the “fund pool” for operating investment. The actual control ability of the "fund pool" is a necessary condition for the court to determine that the perpetrator collects funds, and this is also the key to incrimination at the level of constituent elements of fund-raising crimes.

As a common model in the financial industry, the "capital pool" business is often linked to legal risks based on its characteristics of mixed operation and non-separation of funds. Since the "capital pool" business can penetrate into various commercial fields, the accompanying ambiguity of the regulatory body makes the lag of regulatory intervention the norm. For this reason, Sister Sa’s team suggested that in the field involving the “capital pool” business, even if the relevant regulations have not yet been perfected, the actors should refer to the regulatory compliance measures in similar fields to protect themselves and avoid being held accountable afterwards.

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