(Yicai) Sept. 12 -- Guijiu's shares plunged by their daily trading limit after the actual controller of the Chinese alcoholic drinks maker was arrested on suspicion of illegal fundraising activities through Hywin Financial Holding Group.

Guijiu [SHA: 600696] tumbled 10 percent to close at CNY6.55 (92 US cents) a share in Shanghai today.

The Fengxian district police department in Shanghai has begun an investigation into Haiyin Wealth Management for alleged illegal fundraising, it announced yesterday. Criminal compulsory measures have been taken against Han XX, Han X, Wang X, and other suspects, it added.

Han XX and Han X are Han Hongwei and Han Xiao, the father and son who are the actual controllers of Haiyin Wealth, with the latter also being the actual controller and chairman of Shanghai-based Guijiu, Yicai found. The two ranked 1,008th on the Hurun China Rich List last year, with a combined net worth of CNY6 billion (USD840 million).

The 65 percent stake held by Han Xiao and his concerted parties in Guijiu has been frozen, with Han currently unable to fulfill his duties as chairman, general manager, and board secretary, the company said. Vice Chairman Chen Qi will temporarily assume Han's responsibilities, with other management personnel performing their duties as normal, it added.

Haiyin Wealth was established in Shanghai in 2006, while Haiyin Holdings went public in New York in March 2021. According to its prospectus, it is China's third largest and fastest-growing third-party wealth management institution, "offering products that invest in real estate projects by China Evergrande Group, Sunac China Holdings, and others."

Haiyin Holdings had 185 wealth management centers in 91 Chinese cities as of mid-last year, with 1,749 financial advisors, 46,627 active clients, and a presence in the United States and the United Kingdom.

All products under Hywin Wealth ceased repayments at the beginning of last December, while in May, a media investigation revealed that its assets were fabricated and the whereabouts of most of the raised funds were unknown.

Editor: Martin Kadiev