A group of investors claiming to have lost money on risky foreign exchange trades occupied the offices of an Australian brokerage in Shanghai, holding staff hostage for the past three days, according to the firm.
The drama highlights the freewheeling, casino culture of Chinese finance, where retail buyers seeking to beat low bank returns with speculative investments often lose money and sometimes take matters into their own hands.
In this case a group of investors blamed Union Standard Group Forex (USGFX), based in Sydney, for losses of about $2.6m in foreign currency trades this week and wanted their money back.
USGFX said that up to 50 investors entered their offices Wednesday afternoon, initially taking 20 staff hostage. Most staff were let go but three staff from China and Taiwan continued to be held in the offices as of Friday, USFGX said on its WeChat account.
Local news reports say food and water were brought to the offices and that one of the employees may have received minor injuries in a scuffle. Photographs posted by the company on WeChat showed CCTV footage of the confrontation, with staff of the brokerage scuffling and arguing with a group of people.
Other images appear to show staff sleeping on the floor of a conference room.
Justin Pooni, marketing manager for USGFX, said nothing like this had ever happened before and the company was working with the Chinese authorities. “It’s a very strange and bizarre situation,” he told Australia’s state broadcaster. “We’re hoping for the best.”
Chinese retail investors have a penchant for get-rich-quick schemes and to fight back when things go badly.
In 2015, after investors in the Fanya metals exchange lost billions in bad trades after the exchange suspended trading, many took to the streets and staged sit-ins outside China’s securities regulator. More than 22,000 investors lost money, in many cases their life savings.
Also in 2015, an investor stabbed the chief executive of a struggling Beijing-based asset management company after he lost money.
USGFX has offices in Shanghai and Hong Kong and is regulated by the Australian Securities and Investment Commission, the country’s main market regulator.
No information was available about the trades that lost money. USGFX denied allegations in media reports that it had defrauded investors.
“We have given the agent and clients a detailed explanation but they have rejected USGFX’s explanations,” the brokerage said on WeChat, adding that the clients had sought full compensation. “USGFX will not accept, nor compromise.”