A number of illegal funds that purport to deliver high returns in foreign investments are soliciting assets from Chinese investors, China Daily reports. One such fund, the Switzerland Mutual Fund, promises a 300% return within 450 days and has raised $12.9 million since it launched late last year.As a result, China’s foreign exchange regulator, the State Administration of Foreign Exchange, is warning investors against the scam.

The funds operate like pyramid schemes, the regulator said, and once money stops flowing into the funds, the remaining investors will be badly hurt.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.