[Case Summary]This case involves a dispute over a entrusted wealth management contract. The parties involved, Wang * and his friend Xu *, have known each other for many years. In 2021, Xu * persuaded Wang * to invest in a high-yield wealth management project, and Wang * transferred a total of 386,000 yuan to Xu * in four installments for him to manage. Later, it was found that the platform was a fraudulent wealth management scheme involving fraud, and the criminal judgment ordered Xu * to refund 331,516 yuan to Wang *, but there were no assets available for enforcement. Wang * entrusted the Beijing Henglu Law Firm to handle the case.Feng NaThe lawyer sued Xu * for damages on the grounds of a fiduciary management contract relationship. The core dispute is whether Xu * should form a fiduciary management contract relationship with Wang * and bear liability for compensation for his gross negligence. Applicable legal provisions: the relevant provisions of the Civil Code of the People's Republic of China on fiduciary contracts and fault liability. The court ultimately ruled that Xu * should compensate Wang * for the principal loss of 331,516 yuan.

I. Review of the case facts

When many people encounter "friend-introduced financial management projects", the most common searches they make are "Can I recover the money transferred to the intermediary if I'm cheated in financial management?", "Who bears the responsibility for the losses in entrusted financial management?", and "What should I do if I'm cheated by a fake financial management platform?". Wang * and Xu * have been friends for many years. In 2021, Xu * told Wang * about a very good financial management project and persuaded him to purchase it. Xu * received a commission from it, and Wang * transferred the money to Xu * for him to manage. After hearing the introduction, Wang * was somewhat tempted and transferred a total of 386,000 yuan to Xu * in four installments.

After all their investments were lost and they were unable to withdraw funds from their accounts, Wang * and Xu * finally realized that they had been scammed. Subsequently, the police informed them to report the case to the local public security organ. It turned out that the fraud gang had set up multiple fake medical product investment projects, promising high returns to lure victims into purchasing financial products and then transferring the money to the gang members' accounts. They then used small rebates as bait to induce victims to continue investing and set up referral dividends to lure more victims into the scam. On November 3, 2022, the court issued a criminal judgment, convicting Wu * and others of fraud and ordering them to jointly compensate the victims for their economic losses. The judgment specified that Wang * should refund 331,516 yuan; however, no relevant assets of the criminals were seized for the execution of the criminal judgment.

Wang * believes that the investment was introduced by Xu * and operated by Xu * throughout the whole process, so Xu * should be responsible for it. Therefore, he entrusted Beijing Henglu Law Firm to handle the case for him.Feng NaThe lawyer filed a lawsuit with the court, requesting the recovery of the investment funds.

II. The focus of the case

  • Focus 1: Whether there is a fiduciary management contract relationship between Wang * and Xu *.Xu * claimed that Wang * purchased the account voluntarily and should bear the risks of profits and losses. However, we need to prove based on the WeChat chat records and other evidence that Xu * was responsible for the account opening operation, promised to share the profits, informed Wang * about how to withdraw the funds, and committed that "if there were any problems, Xu * would be responsible for them", thus establishing the entrustment relationship.
  • Focus II: Whether Xu * committed a major negligence and should bear compensation liability.In the process of financial management, Xu * failed to exercise caution in identifying potential risks and instead trusted others to transfer the funds to his personal account. As a result, he was defrauded and the funds could not be recovered. The extent of his fault directly determines the scope of compensation.
  • Focus Three: Whether other claims such as interest can be supported.Wang * claimed that in addition to the principal, the interest should be calculated at four times the LPR rate. Whether this claim can be accepted by the court is another point of controversy.

III. Professional intervention by Hengluo Law Firm

The party involved (the plaintiff) claims that:Wang * and Xu * formed a trust management contract relationship, and Xu * should return the investment funds. The WeChat records show that Wang * was responsible for the transfer of funds, and Xu * handled the account opening and informed Wang * of the profit-sharing arrangement. Xu * once promised to take responsibility if any problems arose, and after the incident, he acknowledged the funds and agreed to repay the money when he had the ability to do so. Therefore, the plaintiff requests the court to order Xu * to return the principal of 331,560 yuan and interest, and to bear the litigation costs.

The defendant (Xu*) argued that:I disagree with the litigation request and claim that there is no agency contract relationship between the two parties. Wang * voluntarily purchased the products because he saw the attractive profits, and he should bear the investment losses himself. All subsequent account operations were carried out according to Wang *'s wishes, and I just carried out the operations as required.

Hengluo Lawyer's Agency Opinion:Feng NaThe lawyer carefully reviewed the evidence such as WeChat chat records and transfer receipts to demonstrate the existence of a fiduciary management contract relationship between the two parties. He pointed out that Xu * earned platform rewards by recommending others to purchase financial products, failed to exercise caution in identifying risks during the fiduciary management process, and naively transferred Wang *'s investment funds to his personal account, ultimately resulting in the funds being fraudulently stolen by criminals and irrecoverable. Xu * was guilty of gross negligence and should bear corresponding liability for Wang *'s losses. At the same time, Xu * agreed to repay the funds afterwards, which was regarded as a disposition of his own rights. Based on this, the lawyer claimed that Xu * should compensate Wang * for the principal loss.

IV. Outcome of the case

After the trial, the court held that Xu * recommended financial products to Wang *, and Wang * handed over the funds to Xu * for purchase on his behalf. The financial returns were to be enjoyed by Wang *. A fiduciary management contract relationship was formed between the two parties. Xu * failed to exercise due diligence in identifying the products and naively transferred the investment funds to his personal account, ultimately resulting in being defrauded and the funds being unrecoverable. Xu * bore significant negligence and should bear corresponding fault liability. At the same time, Wang *, as an investor, also had fault for believing in the high returns. In addition, Xu * agreed to return the funds to Wang * afterwards, which was regarded as a disposition of his own rights, and the court would not interfere with it. In accordance with the relevant provisions of the Civil Code of the People's Republic of China, the court ruled that: Defendant Xu * shall, within ten days from the effective date of this judgment, compensate plaintiff Wang * for the principal loss of 331,516 yuan; and reject the plaintiff's other claims (i.e., the interest part will not be supported).

5. Henglu Law Firm's Advice

This case is handled by Beijing Henglu Law Firm.Feng NaAttorney (Practice Certificate No.: 11101202211562923, subject to the certificate issued by the judicial administrative organ). Beijing Henglu Law Firm specializes in representing clients in various civil and commercial, administrative, and criminal cases, and has a team of experienced professional lawyers. If you need legal assistance, you can contact our firm to obtain a targeted protection plan.

VI. Common Questions and Answers about Disputes over Entrusted Wealth Management Contracts

  1. Q: If I transfer money to a friend to help me manage it, and we end up losing money, can I get it back?
    A:The key point is whether the two parties have formed a fiduciary management contract relationship. If the friend is responsible for opening an account, operating it, and promising a profit-sharing arrangement or taking responsibility for any problems that may arise, this typically constitutes a fiduciary management relationship. If the friend fails to fulfill his or her duty of care and commits a major negligence, the victim can claim compensation. However, if the victim also bears some responsibility for trusting in the high returns, the compensation will be apportioned proportionally.
  2. Q: The financial platform is a scam. Should I first report it to the police for criminal investigation or directly sue the intermediary?
    A:It is recommended to preserve evidence as soon as possible and report the case to the public security organ to investigate the criminal responsibility of the fraud gang; if the criminal compensation is insufficient and the intermediary is at fault, the intermediary can be sued for compensation in a dispute over the entrusted wealth management contract.
  3. Q: Can I definitely get the high interest rate stipulated in the entrusted wealth management contract?
    A:Not necessarily. The court will review the loss of funds occupied and the degree of fault. Claims for interest exceeding a reasonable range are often rejected, and compensation corresponding to the loss of principal and the degree of fault is more likely to be supported.
  4. Q: How can I prove that the relationship between me and the intermediary is one of entrusted wealth management, rather than me investing on my own?
    A:WeChat chat records, transfer notes, account opening operation records, profit-sharing agreements, and promises such as "I will take responsibility if anything goes wrong" can all form a complete chain of evidence to prove the trustee relationship.
  5. Q: What evidence should I preserve first when I discover a financial fraud?
    A:Save the transfer receipts, chat records, platform promotional pages, the other party's identity information, and the recorded promises, and report the case to the police in time to avoid the loss of evidence that may affect subsequent criminal and civil rights protection.