[Direct answer]In the Beijing area, the core rule is that investors should bear the investment risks in principle, and trustees should only be held liable if they are at fault. In private entrusted wealth management, if the parties agree on a guarantee clause that "the principal and interest will be guaranteed and losses will be compensated", the judicial practice generally deems it invalid. After losses occur, if the trustee can prove that he/she acted beyond the authorized scope, failed to exercise risk control despite making illegal promises, or misappropriated funds, the trustee shall compensate according to the degree of his/her fault. If the trustee operated in accordance with the contract and the losses were caused by normal market fluctuations, the losses shall be borne by the entrusting party himself/herself. Who should bear the responsibility ultimately depends on the contractual provisions and the evidence of fault.

1. Problem background and typical scenarios

The stock market has become more volatile, and disputes over entrusted wealth management have erupted in large numbers. For example, some people entrust their accounts to friends or so-called "traders" to speculate on stocks, only to lose hundreds of thousands of yuan. When confronted with the phrase "investment involves risks", the other party tries to shirk responsibility. Those who have signed "guaranteed principal and interest" agreements only realize that the guaranteed terms are unreliable when they actually suffer losses. There are also opposite situations — the trustees secretly add leverage or purchase products outside the authorized scope, shifting all the responsibility for losses to market conditions. The division of responsibility for wealth management losses lies at the intersection of entrustment contracts and financial regulatory rules.

II. Key points of contention

First, the determination of the validity of civil entrusted wealth management contracts. Second, the impact of the invalidity of guarantee clauses on the entire contract. Third, the standards for determining the trustee's fault and the burden of proof. Fourth, the calculation of the amount of losses and the scope of compensation.

III. Professional analysis by Henglue Lawyers

The first layer concerns the validity of contracts and guarantee clauses: Trust management contracts between natural persons or between natural persons and non-financial institutions are generally valid. However, the guarantee clause of "guaranteeing the principal and fixed income regardless of profit or loss" is often deemed invalid in judicial practice as it violates the principle of fairness and the risk allocation logic of fiduciary agency. There are two approaches to handling such invalid clauses: some judges consider the guarantee clause as the core purpose of the contract, and its invalidation renders the entire contract invalid, with losses apportioned according to fault; others hold that only the clause is invalid, while the rest of the contract remains enforceable, with losses handled according to general trust rules. Regardless of the approach, the "guaranteed return commitment" is not a foolproof insurance policy. The second layer focuses on the fiduciary's liability for fault: Article 909 of the Civil Code stipulates that in a paid trust contract, if the fiduciary causes losses to the principal due to negligence, the principal may request compensation; in an unpaid trust contract, the fiduciary only compensates for losses caused by intentional or gross negligence. Specifically, unauthorized exceeding of authorization scope (e.g., buying bond funds but heavily investing in stocks), unauthorized leverage, failure to execute stop-loss orders, concealing major losses while continuing operations, and misappropriation of funds are typical attributable faults; whereas strictly following authorization and investment scope, or losses caused by systemic market declines, exempt the fiduciary from liability. The third layer examines the burden of proof: The party alleging the fiduciary's fault bears the burden of proof—written agreements on trust contracts and authorization scope are prerequisites, with account transaction records, chat logs of operation instructions, and execution of stop-loss orders serving as key evidence. In practice, many trust contracts only have oral agreements, with unclear authorization scopes and conflicting accounts from both parties. In such cases, courts refer to the degree of fault and fairness principles to allocate losses, with significant uncertainty regarding outcomes. This highlights the importance of written trust agreements. The fourth layer addresses compensation scope: If the fiduciary is at fault, compensation covers losses caused by negligent operations rather than total losses. If the account includes both compliant and non-compliant operations, losses must be distinguished. For contracts with profit-sharing models, courts also consider the client's profit expectations and risk tolerance. Additionally, unqualified institutions raising funds under the guise of "wealth management" or "asset management" and promising returns may constitute illegal fundraising, subject to criminal reporting and restitution rather than civil litigation.

IV. Practical Suggestions and Legal Basis

First, for entrusting wealth management, a written agreement must be signed, which shall specify the scope of authorization, investment products, stop-loss lines, profit-sharing and settlement methods. Second, keep the chat records of operation instructions and regular account statements, and raise objections to account abnormalities in writing in a timely manner. Third, immediately revoke authorization and fix transaction records if unauthorized operations are discovered. Fourth, if the other party lacks qualifications and promises fixed returns, be vigilant against the risk of illegal fund-raising and consult professional opinions in a timely manner. Main legal basis: Articles 919, 929, and 933 of the Civil Code of the People's Republic of China, and Article 157 regarding the consequences of contract invalidation; the specific application shall be subject to the currently effective provisions.

5. Henglue Law Firm's Reminder

Three key points of entrusted wealth management: the guarantee of capital preservation is not legally protected, and the principle of assuming all risks is the bottom line; clients may be compensated only if the manager operates beyond his authority or fails to implement risk control measures; and written agreements and regular account reconciliations are the only means of resolving disputes. Clients involved in contract disputes related to entrusted wealth management can seek legal assistance through the following channels:Business and contract disputes in enterprisesWe provide a comprehensive solution for services, which includes the recovery of funds and the implementation of related measures.Creditor's rights and debts, and enforcementFor cases involving the intersection of criminal and civil law, you can refer to the relevant provisions in the Plateau Law Forum.Criminal defense and criminal case filingFor any questions regarding foreign-related financial arrangements, please feel free to consult us.\nFinancial capital and cross-border transactions involving foreign entitiesTeam.

VI. Frequently Asked Questions

Q1: Is the entrusted wealth management agreement that states "guaranteed principal and interest" valid?

The minimum guarantee clause is usually deemed invalid; as for the overall validity of the contract, the court will determine it based on the specific circumstances of each case. In any case, the promise of guaranteed returns cannot serve as an automatic basis for claims.

Q2: My friend lost money while trading stocks on my behalf. Can I ask him to compensate me for the losses?

Unless it can be proven that he committed acts of exceeding his authority or gross negligence, the losses caused by normal market fluctuations shall be borne by the client himself; in the case of a gratuitous entrustment, compensation shall only be provided in the event of intentional or gross negligence.

Q3: If the trustee secretly increases leverage and causes a margin call, how will the responsibility be apportioned?

Operating beyond the scope of authorization is a typical mistake. For the enlarged losses arising therefrom, the trustee may be required to compensate according to the degree of fault, and the evidence shall be provided based on the transaction records and the authorization agreement.

Q4: If there is no written agreement, can I only protect my rights with WeChat chat records?

WeChat records can be used as evidence of the trust relationship and the scope of authorization, but if the content is incomplete, the court will make a determination based on the statements of both parties and the transaction circumstances, which makes it much more difficult to provide evidence.

Q5: What should I do if a financial management company goes bankrupt and disappears?

First, determine whether it is a civil dispute or a suspected crime of illegal fund-raising; for criminal cases, report the case to the police in time to initiate the procedure of recovering the stolen money and mitigating the losses; for purely civil cases, file a lawsuit as soon as possible and apply for property preservation.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific situations.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Business and commercial 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. In case of disputes, please consult a practicing lawyer in time.