Beijing Police Launch Investigation Into Troubled Wealth Manager Zhongzhi

CHINA - SHANGHAI - Beijing police are investigating suspected crimes committed by Zhongzhi Enterprise Group, a leading Chinese wealth manager, according to a social media post published by the Chaoyang Public Security Bureau on Saturday.

Zhongzhi earlier this week told investors it is heavily insolvent with up to $64 billion in liabilities, threatening to reignite concerns that China's property debt crisis is spilling over into the broader financial sector.

The firm has sizable exposure to China's real estate sector and is a major player in China's $3 trillion shadow banking sector - roughly the size of the French economy.

Zhongzhi did not immediately reply to an email request for comment after normal business hours on Saturday. A phone call went unanswered.

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Zhongzhi apologized to its investors in a letter issued on Wednesday that said it had total liabilities of about 420 billion yuan ($58 billion) to 460 billion yuan ($64 billion), compared to estimated total assets of 200 billion yuan.

The social media post from Beijing authorities said it was looking into "many" suspects involved with the company and encouraged investors to report their losses in order to help with the ongoing investigation.

"Investors are requested to actively cooperate with the police in investigating and collecting evidence and safeguard their rights and interests through legal channels," it read in part.

The post did not specify what crimes Zhongzhi or the individuals were suspected of having committed.