Three men and two women went on trial yesterday at Shanghai Huangpu District People's Court for operating an illegal company trading in gold futures.

Wang Hao, Jin Changnan, Hong Hui, Cheng Lei and Hu Jiannan are accused of being the principals of the illegal company. The company managed to attract 723 clients.

The clients lost about 30 million yuan(US$4 million) between 2004 and 2006.

The company's total turnover for the three years amounted to more than 20 billion yuan.

The judges said it is the first prosecution of its kind in the country. The gang, led by Wang Hao, face prison terms of more than five years each if convicted.

Wang, 51, founded the Shanghai Liantai Gold Company at the end of 2003 by faking a 4 million yuan registration capital.

He claimed the company was a member of the Shanghai Gold Exchange, and was authorized to trade in gold futures.

Wang established his own trading rules and began operating in March 2004.

Investors were promised that their small deposits could see gains of 60 percent.

Wang told the court the company followed the international gold market. Clients could invest for either appreciation or depreciation and earn from the price differential.

The scheme soon attracted 223 clients in Shanghai and another 500 in 15 other cities, where the defendants set up offices.

The company charged a US$100 service fee for every purchase and sale. Once a contract's value dropped to a certain level, the client was forced to foreclose.

The city's industry and commerce department started investigation last year following a tip-off that the company was operating without a license.

The five were arrested in August last year. The hearing continues.

(China Daily August 30, 2007)