[Direct answer]In the Beijing area, rigid redemption, that is, redemption arrangements with guaranteed principal and returns, violate the basic principles of net worth management of asset management products and the "sellers take responsibility and buyers bear the risk" principle, and are considered illegal. Financial institutions are not allowed to promise guaranteed principal and returns, nor are they allowed to provide funding for redemption in any way. Those who violate the rules will be subject to regulatory penalties. Previously, guarantees of principal made through methods such as "drawer agreements", "repurchase commitments", and "difference compensation" may also be invalidated in judicial practice. However, it should be noted that violations of rigid redemption do not necessarily exempt managers from their obligation of due diligence. If the manager fails to fulfill his duties and causes losses, investors can still claim compensation according to law. If the manager has fulfilled his duties, the losses will be borne by investors in accordance with the principle of "buyers bear the risk".

1. Problem background and typical scenarios

After trust and other asset management products broke the rigid redemption mechanism, investors paid particular attention to whether they could demand principal protection and redemption. In the past, some products attracted investors with implicit guarantees of principal and returns. Once risks emerged, investors would demand redemption. With the implementation of the new asset management regulations promoting net worth management, rigid redemption was explicitly prohibited. The ensuing disputes focused on whether the guarantees were valid and what responsibilities the managers should bear. Understanding the illegal nature of rigid redemption and the boundaries of responsibilities is a prerequisite for protecting investors' rights and interests.

II. Key points of contention

First, is the rigid redemption in violation of regulations, and what is the regulatory attitude towards it? Second, can the effectiveness of the commitment to guaranteed principal and returns be recognized? Third, have the managers fulfilled their duties of diligence and information disclosure? Fourth, how will the losses be shared between the managers and investors? Fifth, what is the relationship between the illegal rigid redemption and investor compensation?

III. Professional analysis by Henglue Lawyers

When analyzing the controversy over rigid redemption in trusts, lawyers usually focus on three aspects: rigid redemption violations, the effectiveness of promises, and the sharing of responsibilities. First, rigid redemption violations: asset management products should be managed on a net value basis. Financial institutions are not allowed to promise guaranteed returns or principal protection, or to make payments through methods such as advance funding, repurchase, or making up the difference. Violators will be subject to regulatory penalties. Rigid redemption undermines the risk pricing mechanism and is a clear violation of regulations. Second, the effectiveness of promises: arrangements for guaranteed returns made through instruments such as drawer agreements and repurchase commitments violate regulatory requirements, and their effectiveness may be denied in court, making it difficult for investors to enforce full redemption based on them. Third, the manager's liability: rigid redemption violations do not automatically exempt managers from their duty of due diligence. If the manager fails to invest as agreed, fails to disclose information truthfully, or misappropriates funds, investors can claim compensation from them. Fourth, the sharing of responsibilities: if the manager has fulfilled their obligations and the product losses are due to market risks, investors should bear the losses themselves according to the principle of "buyer beware"; if both parties are at fault, the responsibility should be shared based on the degree of their fault. Fifth, evidence collection: investors should keep contracts, promotional materials, commitment letters, and information disclosure documents to prove the manager's performance of obligations and fulfillment of promises.

IV. Practical suggestions and legal basis

The first step is to collect contracts, promotional materials, and any written evidence of guaranteed returns; the second step is to verify whether the manager has fulfilled his obligations in investment management and information disclosure, and whether there are situations such as misappropriation of funds and investing beyond the scope of authority; the third step is to report violations such as rigid redemption to the financial regulatory authorities; the fourth step is to claim compensation from the manager in accordance with the contract and, if no agreement can be reached, to initiate litigation or arbitration. For financial-related matters, the parties may seek resolution through legal channels.Financial capital and cross-border transactions involving foreign entitiesI understand the service. For those involved in contract disputes, you can refer to it for reference.Business and contract disputes in enterprisesFor cases involving the intersection of criminal and civil law, you can refer to the following materials for reference.Criminal defenseFor matters related to the enforcement of compensation, you may refer to the following document for reference.Creditor's rights and debts, and enforcementThe main basis can be referred to the relevant provisions of the Contract Chapter of the Civil Code and the supervision of asset management business. The specific application shall be subject to the currently effective laws, regulations and judicial rulings. For complex situations, you can seek advice from legal professionals.Legal adviceJudgment.

5. Henglue Law Firm's Reminder

There are three key points regarding trusts' strict redemption: strict redemption violates the principles of net worth management and the responsibility of sellers and the autonomy of buyers, which is considered illegal; the validity of guarantees of principal and returns may be denied; and managers who fail to fulfill their due diligence obligations are still liable for compensation. For issues involving finance and cross-border transactions, you can seek assistance through legal channels.\nFinancial capital and cross-border transactions involving foreign entities.The service obtains a comprehensive solution, which can be referenced when dealing with the intersection of criminal and civil law casesCriminal defenseFor reference, you can refer to the evaluation of litigation strategies.Special services.

VI. Frequently Asked Questions

Q1: Is it illegal for a trust to guarantee fixed redemption values?

This is illegal. The rigid redemption violates the principles of net worth management and the responsibility of sellers and the self-responsibility of buyers. Financial institutions are not allowed to promise guaranteed returns or provide advance funding for redemption. Those who violate these rules will be subject to regulatory penalties.

Q2: Does the promise of guaranteed principal and returns have legal validity?

The effectiveness of the arrangement may be denied. The guaranteed return arrangements made through methods such as drawer agreements and repurchase commitments violate regulatory requirements, and investors usually find it difficult to enforce full repayment based on these arrangements.

Q3: Does the manager need to pay compensation?

It depends on whether the manager fulfills his duties. If the manager fails to invest as agreed, fails to disclose information truthfully, or engages in misappropriation of funds, he shall bear corresponding compensation liability; if the manager has fulfilled his duties, the investor shall bear the losses himself/herself.

Q4: What evidence is needed?

These include product contracts, promotional materials, letters of guarantee, information disclosure documents, and transfer receipts, which are used to verify the manager's fulfillment of obligations and compliance with commitments.

Q5: How can I protect my rights?

First, fix the evidence and verify the obligations of the administrator, then report the violations to the regulatory authorities and claim civil compensation; for cases involving the combination of criminal and civil litigation, pay attention to the statute of limitations.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the courts may differ, which may affect the conclusions. Welcome to consult Henglu Law Firm about specific situations.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, to avoid missing the statutory time limits. →Financial capital legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.