[Direct answer]In the Beijing area, those who have been misled into purchasing funds through false advertising can seek compensation through such channels as negotiation for refunds, administrative complaints, civil litigation, and criminal reporting. If the sales institutions or personnel promise guaranteed returns, exaggerate claims, or conceal major risks, and such actions constitute fraud, the deceived party has the right to request the rescission of the contract in accordance with Article 148 of the Civil Code of the People's Republic of China (effective January 1, 2021) and to demand the return of property and compensation for losses in accordance with Article 157. The fund sales promotion activities are also subject to the supervision and management of the Securities Investment Fund Law of the People's Republic of China (amended and adopted on December 28, 2012, effective June 1, 2013, and amended on April 24, 2015) and the Supervision and Management Measures for Sales Agencies of Publicly Offered Securities Investment Funds (effective October 1, 2020). For cases involving illegal fund-raising or fraud, victims can report the cases to recover losses through criminal recovery and restitution, and refer to relevant legal provisions as necessary.\nCross-border financeColumn.

1. Problem background and typical scenarios

These types of rights protection cases are common in several scenarios: First, someone in a live stream or short video promotes funds with phrases like "internal channels" and "guaranteed profit with no loss", and investors buy at high prices; Second, sales staff at outlets or wealth management institutions exaggerate historical performance and conceal the maximum drawdown and fees; Third, so-called high-interest funds are promoted in WeChat groups or among acquaintances, but they are actually unlicensed pseudo-private funds; Fourth, private equity funds are split into shares and sold to unqualified investors; Fifth, elderly investors are misled into purchasing products that do not match their risk tolerance. When the Beijing district court handles similar cases, it attaches great importance to the performance of sales institutions' due diligence obligations, and related commercial disputes can be referred to for reference.Business and contract disputes in enterprisesColumn.

II. Key points of dispute

Focus One: The distinction between false advertising and normal marketing. Promising returns, exaggerating performance, and selective disclosure constitute illegal advertising, while general market opinions do not necessarily constitute fraud. Focus Two: Review of the obligation of suitability. If the selling institution fails to understand the client's risk tolerance or disclose risks, it should bear corresponding responsibilities. The Summary of the National Court Civil and Commercial Trial Work Conference (issued on November 8, 2019) has established adjudication rules in this regard. Focus Three: The preclusive period for revocation of fraud. It is one year from the date when the revocation grounds become known or should have become known (Article 152). Focus Four: Calculation of losses and causality. Losses caused by market fluctuations should be distinguished from those caused by misleading information. Focus Five: The connection between criminal restitution and civil compensation. Focus Six: Whether to claim against the salesperson individually or the institution. Specifically, refer to the currently effective laws, regulations, and judicial rulings. For matters related to restitution enforcement, please refer to relevant provisions.Creditor's rights and debts, and enforcement casesColumn.

III. Professional analysis by Henglue Law Firm

From the practical experience of lawyers handled by our firm, the core of disputes over false advertising in fund sales lies in evidence and the choice of parties involved. Common forms include promises of guaranteed returns, falsifying or exaggerating historical performance, concealing redemption restrictions and fee structures, creating a sense of scarcity with "internal quotas," and inducing elderly investors to sign blank risk disclosure documents. There are three common pitfalls: First, investors who hold onto the products after discovering the misleading information may suffer greater losses as the market expands, making causation determination more complex. Second, investors only pursue claims against individual sales personnel, whose repayment capacity is limited, while neglecting to hold the sales institutions and custodians accountable. Third, investors miss the one-year right of revocation period and can only pursue claims for infringement or breach of fiduciary duties, which imposes higher evidentiary requirements. Lawyers handled by our firm typically first analyze the differences between promotional materials and contracts, risk disclosure documents, evaluate whether to pursue revocation, infringement compensation, or administrative complaints, then simultaneously calculate losses and select a combination of parties to pursue claims. When necessary, they collaborate with other investors to gather evidence and strengthen their position in negotiations and litigation.

IV. Practical suggestions and legal basis

Action suggestions: First, immediately sort out promotional materials, chat records, audio recordings, contracts, and transfer receipts to fix evidence of false advertising; Second, check whether the institution and personnel have qualifications for fund sales. Selling without qualifications will directly increase the chances of winning; Third, assess whether to exercise the right of revocation, paying attention to the one-year exclusionary period from the date of knowing the grounds for revocation; Fourth, file a complaint with the securities regulatory commission's local offices or the 12386 hotline. The administrative handling conclusion can be used as evidence in litigation; Fifth, report any suspected illegal fundraising or fraud to the police in a timely manner, and refer to the relevant provisions for matters involving the recovery and repayment of fundsSpecial services and other casesThe column. In terms of legal basis, Articles 148, 152, and 157 of the Civil Code of the People's Republic of China regulate fraudulent rescission and restitution of compensation; the Securities Investment Fund Law of the People's Republic of China imposes restrictions on the promotion and publicity of publicly offered funds; and the Supervision and Management Measures for Sales Agents of Publicly Offered Securities Investment Funds (effective October 1, 2020) specify norms for sales activities.

5. Henglu Law Firm's Reminder

Risk Warning: Firstly, investment losses do not necessarily mean being defrauded. It is necessary to prove the causal relationship between false advertising and investment decisions. Secondly, after the one-year revocation period expires, the revocation path is basically closed, so it is necessary to protect one's rights as soon as possible. Thirdly, the clauses promising guaranteed principal and returns are invalid, but this does not exempt investors from assessing their own faults. Fourthly, civil cases may be suspended when criminal procedures take precedence, so it is necessary to make overall arrangements. Fifthly, don't be easily cheated by the "rights protection agent" charging fees twice. It is recommended to fix evidence as soon as possible and seek legal advice.Beijing Henglu Law FirmFor similar columns on the official website, formulate a claim settlement plan.

VI. Frequently Asked Questions

Q1: If I'm misled by false advertising when buying funds, can I get my principal back?

There are conditions. If the seller can prove that he/she promised guaranteed returns, exaggerated performance, or concealed major risks, and this constitutes fraud, the buyer may request to rescind the contract in accordance with Article 148 of the Civil Code and claim the return of property and compensation for losses in accordance with Article 157. Even if it does not constitute fraud, if the seller violates the obligation of suitability, he/she may also bear liability for compensation according to the degree of fault. If it is a loss due to normal market fluctuations, it will be difficult to demand the return of funds. The outcome will depend on the evidence and the facts of the individual case.

Q2: What evidence should be collected for a claim against a fund for false advertising?

Key evidence to collect includes: promotional materials, live stream replays, screenshots of group chats and Moments; chat records and audio recordings of sales personnel promising returns and downplaying risks; fund contracts, risk disclosure documents, and investor suitability assessment forms; bank transfer and redemption records; and product net values and loss situations. If the assessment forms are signed by others or the risk disclosure is just a formality, it is advisable to save these documents together to prove that the sales process violates regulations. The evidence should be preserved in its original form.

Q3: How much does it cost to claim compensation from a fund?

The litigation fees are paid in stages based on the amount of the claim, and the portion of the successful litigation is shared proportionally; the attorney's fees are negotiated according to the amount of the dispute and the complexity of the evidence, with no uniform standard. Some cases can be settled through risk-based attorney fees. If you first file an administrative complaint or negotiate with the institution, the problem may be resolved at a lower cost. It is recommended that you first have a lawyer evaluate the strength of the evidence and the scope of the claim, and then decide on the scale of investment to avoid excessive spending on small losses.

Q4: How long does it usually take to file a claim for a fund?

For cases resolved through consultation with the agency or mediation of administrative complaints, they may be settled within a few months; for first-instance litigation, the ordinary procedure does not exceed six months, and the summary procedure does not exceed three months; for second-instance litigation, it takes about three months; and for cases involving appraisal of net worth losses or service of announcements, the timeframe will be extended. If a criminal case is involved, the civil proceedings may be suspended pending the outcome of the criminal case. The time cost mainly lies in the evidence sorting stage, and the earlier it is initiated, the more proactive it will be.

Q5: What's the first step to take if you find yourself being misled by false advertising?

The first step is to immediately preserve all original evidence of promotion and communication; the second step is to assess the risk of holding the product and decide whether to redeem it to cut losses; the third step is to verify the qualifications of the seller and estimate the correlation between losses and misleading; the fourth step is to file a complaint with the CSRC's dispatched agencies or the 12386 hotline; the fifth step is to evaluate whether to sue or report the case within the statute of limitations, and if there are many victims involved, they can join forces with other investors and refer to relevant provisions for guidance.\nCross-border financeColumn.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudication opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Financial capital legal services·Beijing Henglue 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.