Police in Shenzhen, southern China, have detained employees of controversial property developer Evergrande’s wealth management unit.
In a social media post, police asked the public to report any examples of suspected fraud.
Meanwhile, a newly formed state-owned insurer announced the acquisition of the firm’s insurance branch on Friday.
Evergrande is at the epicenter of a real estate crisis that has gripped China since 2021.
“Recently, public security organs took criminal compulsory measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co,” said the Shenzhen Nanshan District Police Bureau on Saturday.
There was no word on how many persons were detained, their identities (save for the guy named simply as Du), or the charges they would face.
Police also stated that the situation is still being investigated and that investors may submit complaints with authorities.
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Evergrande Financial Wealth Management Co. is a wholly-owned subsidiary of Evergrande, which was founded in Shenzhen in 2015.
Du Liang is the general manager of Evergrande Financial Wealth Management, according to his Linkedin page. The BBC was unable to confirm whether he was held by police.
Evergrande did not immediately respond to a BBC request for comment.
According to a proposal issued on Friday by China’s National Administration of Financial Regulation (NAFR), the assets and liabilities of Evergrande Life Assurance will be inherited by state-owned Haigang Life Insurance Co. Ltd.
Evergrande shares were trading flat on Monday afternoon, following a 25% fall earlier in the day.
Beijing has been making it increasingly difficult for property developers to obtain finance since 2020.
Evergrande, once one of China’s largest corporations, has amassed debts of more than $300 billion (£242 billion) as it expanded rapidly.
It is now striving to rebuild its business after going bankrupt and incurring enormous losses.
Other large Chinese property developers, such as Country Garden and Sino-Ocean, have had difficulty meeting debt obligations.
The real estate business in China is an important part of the world’s second largest economy.
Some experts are concerned that the sector’s turmoil may destabilize the economy and spread to global financial markets.
For more than two years, Beijing has also been launching a crackdown on alleged corruption in the country’s banking sector.
Top executives have faced harsh penalties, including the death penalty.
