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| China’s ‘Crude Oil Treasure’ Promised Riches. Now Investors Owe the Bank. | China’s ‘Crude Oil Treasure’ Promised Riches. Now Investors Owe the Bank. |
| (10 days later) | |
| The pitches, from one of China’s biggest and most established banks, made the investment seem like a sure bet. | The pitches, from one of China’s biggest and most established banks, made the investment seem like a sure bet. |
| “Oil is cheaper than water” was the slogan for an investment product, called Crude Oil Treasure and sold by Bank of China, that was pegged to the price of petroleum. In one cartoon ad, two men at a gasoline station lament the price of fuel when a third tells them that they should buy barrels of crude instead. “You can make money no matter if the price rises or falls,” he says. | “Oil is cheaper than water” was the slogan for an investment product, called Crude Oil Treasure and sold by Bank of China, that was pegged to the price of petroleum. In one cartoon ad, two men at a gasoline station lament the price of fuel when a third tells them that they should buy barrels of crude instead. “You can make money no matter if the price rises or falls,” he says. |
| That was not exactly true. When global oil prices crashed last month, investors in Crude Oil Treasure lost their money and then some. Because of a quirk in global oil markets, Bank of China said, Crude Oil Treasure investors owed the lender even more money, specifically $37.63 for every barrel they had bought. | That was not exactly true. When global oil prices crashed last month, investors in Crude Oil Treasure lost their money and then some. Because of a quirk in global oil markets, Bank of China said, Crude Oil Treasure investors owed the lender even more money, specifically $37.63 for every barrel they had bought. |
| The outrage that followed has exposed the plight of small investors in the world’s second-largest economy. They have few safe places to park their money. They enjoy limited legal protections compared with investors in other countries. | The outrage that followed has exposed the plight of small investors in the world’s second-largest economy. They have few safe places to park their money. They enjoy limited legal protections compared with investors in other countries. |
| And when they protest, they are often silenced by the authorities. Crude Oil Treasure investors said the police had called and visited them to make sure they would not cause a public fuss. | And when they protest, they are often silenced by the authorities. Crude Oil Treasure investors said the police had called and visited them to make sure they would not cause a public fuss. |
| For Beijing, the timing is problematic. Its people are struggling to overcome the economic devastation caused by the coronavirus outbreak. Its lawmakers are set to meet on Friday for their delayed annual legislative session. Angry, outspoken investors would make for an unwelcome image. | For Beijing, the timing is problematic. Its people are struggling to overcome the economic devastation caused by the coronavirus outbreak. Its lawmakers are set to meet on Friday for their delayed annual legislative session. Angry, outspoken investors would make for an unwelcome image. |
| China’s carefully cultivated image of a strong government that can shield its citizens from the whims of the global market is at stake. | China’s carefully cultivated image of a strong government that can shield its citizens from the whims of the global market is at stake. |
| “This product completely exceeded what we can bear,” said Chen Xueming, an investor in Crude Oil Treasure who has a son about to head to college. | “This product completely exceeded what we can bear,” said Chen Xueming, an investor in Crude Oil Treasure who has a son about to head to college. |
| Mr. Chen bought over $6,000 worth of futures tied to 216 barrels through a Bank of China smartphone app. After oil crashed, he owed nearly $12,700. | Mr. Chen bought over $6,000 worth of futures tied to 216 barrels through a Bank of China smartphone app. After oil crashed, he owed nearly $12,700. |
| It is not clear how many people invested or how much they bought, but the bill for Bank of China could be as much as $1.4 billion, according to Shujin Chen, an analyst at the brokerage Jefferies, based on reports that the lender had 60,000 investors in the product. | It is not clear how many people invested or how much they bought, but the bill for Bank of China could be as much as $1.4 billion, according to Shujin Chen, an analyst at the brokerage Jefferies, based on reports that the lender had 60,000 investors in the product. |
| The authorities have moved to limit the damage. China’s banking regulator said it was investigating. The country’s top leadership has spoken out about the lack of investor protections in volatile markets. | The authorities have moved to limit the damage. China’s banking regulator said it was investigating. The country’s top leadership has spoken out about the lack of investor protections in volatile markets. |
| A Bank of China spokeswoman in Hong Kong declined to answer questions. On May 5, the bank said it would try to protect clients’ interests, was negotiating settlements and would respect judicial decisions if it ended up in court with investors. | A Bank of China spokeswoman in Hong Kong declined to answer questions. On May 5, the bank said it would try to protect clients’ interests, was negotiating settlements and would respect judicial decisions if it ended up in court with investors. |
| China strictly limits moving money abroad in part to protect its people from global market turbulence. It also restricts retail investors from trading in foreign commodity markets. But Bank of China and others in recent years have sold their customers investments that track global markets, exposing them to big risks as well as potential rewards. | China strictly limits moving money abroad in part to protect its people from global market turbulence. It also restricts retail investors from trading in foreign commodity markets. But Bank of China and others in recent years have sold their customers investments that track global markets, exposing them to big risks as well as potential rewards. |
| China is still working to offer its people — traditionally relentless savers who would sock away their hard-earned savings under mattresses or in the bank — safe and diverse places to park their money. Its stock market has historically been volatile, and many Chinese investors consider it rife with insider trading. Its bond market is still limited. Housing is China’s most popular investment vehicle, but that market is prone to bubbles and government intervention. | China is still working to offer its people — traditionally relentless savers who would sock away their hard-earned savings under mattresses or in the bank — safe and diverse places to park their money. Its stock market has historically been volatile, and many Chinese investors consider it rife with insider trading. Its bond market is still limited. Housing is China’s most popular investment vehicle, but that market is prone to bubbles and government intervention. |
| A confluence of events, some of it just bad timing, hurt Bank of China and Crude Oil Treasure investors. But the bank’s poor oversight also played a role, experts say. | A confluence of events, some of it just bad timing, hurt Bank of China and Crude Oil Treasure investors. But the bank’s poor oversight also played a role, experts say. |
| “This product is quite risky, and Bank of China itself did not anticipate such a risk,” said Wu Dong, a partner at Hui Ye Law Firm in Shanghai and an expert in finance law. | “This product is quite risky, and Bank of China itself did not anticipate such a risk,” said Wu Dong, a partner at Hui Ye Law Firm in Shanghai and an expert in finance law. |
| “Such operational risks are definitely not suitable for ordinary investors,” he added. | “Such operational risks are definitely not suitable for ordinary investors,” he added. |
| The hit stemmed from a crisis in the global oil markets. The coronavirus outbreak slashed global demand at the same time that Saudi Arabia and Russia were engaged in a production war. | The hit stemmed from a crisis in the global oil markets. The coronavirus outbreak slashed global demand at the same time that Saudi Arabia and Russia were engaged in a production war. |
| On futures markets, where monthly contracts representing barrels of oil are traded, panicked investors drove prices to new lows. Investors scurried to get out of the May contract, which expired on April 20. Anybody holding the contract when it expired had to take physical possession of the oil. | On futures markets, where monthly contracts representing barrels of oil are traded, panicked investors drove prices to new lows. Investors scurried to get out of the May contract, which expired on April 20. Anybody holding the contract when it expired had to take physical possession of the oil. |
| Bank of China’s Crude Oil Treasure expired on April 20, when the price of oil was racing to zero. To make matters worse, a market rule change made that month allowed the price of oil to go negative. When the dust settled, Bank of China priced its product at -$37.63 per barrel, the final price of the May contract. | Bank of China’s Crude Oil Treasure expired on April 20, when the price of oil was racing to zero. To make matters worse, a market rule change made that month allowed the price of oil to go negative. When the dust settled, Bank of China priced its product at -$37.63 per barrel, the final price of the May contract. |
| Sophisticated investors might expect turbulence in futures markets. But Bank of China pitched its product to consumers. It posted ads online and listed Crude Oil Treasure on the wealth management section of its app, which is meant for its retail customers. Other banks marketed their oil product to sophisticated investors. | Sophisticated investors might expect turbulence in futures markets. But Bank of China pitched its product to consumers. It posted ads online and listed Crude Oil Treasure on the wealth management section of its app, which is meant for its retail customers. Other banks marketed their oil product to sophisticated investors. |
| “I think listing the Crude Oil Treasure in the bank’s wealth management section can be a problem for misleading investors,” said Ms. Chen, the Jefferies analyst. | “I think listing the Crude Oil Treasure in the bank’s wealth management section can be a problem for misleading investors,” said Ms. Chen, the Jefferies analyst. |
| Investors took to online forums to complain. They traveled to the bank’s local branches. Some threatened to go to Beijing to petition the central government. In one public letter, a group of investors accused the bank of “pure gangster logic.” | Investors took to online forums to complain. They traveled to the bank’s local branches. Some threatened to go to Beijing to petition the central government. In one public letter, a group of investors accused the bank of “pure gangster logic.” |
| “As a leading state-owned listed company under the leadership of the party and the government, you are based in the capital of the country,” these investors wrote. “Do you think your above-mentioned behaviors matched your responsibilities and status?” | “As a leading state-owned listed company under the leadership of the party and the government, you are based in the capital of the country,” these investors wrote. “Do you think your above-mentioned behaviors matched your responsibilities and status?” |
| The police response was swift. Online, Crude Oil Treasure investors said members of their family and even colleagues had received calls and visits from local police officers worried that the investors would cause a scene. | The police response was swift. Online, Crude Oil Treasure investors said members of their family and even colleagues had received calls and visits from local police officers worried that the investors would cause a scene. |
| On May 4, the Financial Stability and Development Committee, led by Liu He, China’s vice premier, issued a statement highlighting the risks in international commodities market and the need to “protect the legitimate interests of investors.” | On May 4, the Financial Stability and Development Committee, led by Liu He, China’s vice premier, issued a statement highlighting the risks in international commodities market and the need to “protect the legitimate interests of investors.” |
| A few days later, various Bank of China branches made settlement offers, according to investors. Some promised to pay 20 percent of their original investment. Those who took the deal had to agree to stop any legal action. | A few days later, various Bank of China branches made settlement offers, according to investors. Some promised to pay 20 percent of their original investment. Those who took the deal had to agree to stop any legal action. |
| “You have suffered losses for investing in the Crude Oil Treasure product. For this, we feel for you and are willing to make an effort to go through this hard time with you,” Bank of China told investors in a message on its mobile app that was seen by The New York Times. | “You have suffered losses for investing in the Crude Oil Treasure product. For this, we feel for you and are willing to make an effort to go through this hard time with you,” Bank of China told investors in a message on its mobile app that was seen by The New York Times. |
| Updated May 28, 2020 | |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | |
| More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said. | |
| There is an uptick in people reporting symptoms of chilblains, which are painful red or purple lesions that typically appear in the winter on fingers or toes. The lesions are emerging as yet another symptom of infection with the new coronavirus. Chilblains are caused by inflammation in small blood vessels in reaction to cold or damp conditions, but they are usually common in the coldest winter months. Federal health officials do not include toe lesions in the list of coronavirus symptoms, but some dermatologists are pushing for a change, saying so-called Covid toe should be sufficient grounds for testing. | |
| Yes, but make sure you keep six feet of distance between you and people who don’t live in your home. Even if you just hang out in a park, rather than go for a jog or a walk, getting some fresh air, and hopefully sunshine, is a good idea. | |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | |
| Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities. | |
| The Financial News, a newspaper affiliated with China’s central bank, said four-fifths of investors had agreed to a settlement, citing an official with China’s banking regulator that it did not name. The banking regulator did not respond to a request for comment. | The Financial News, a newspaper affiliated with China’s central bank, said four-fifths of investors had agreed to a settlement, citing an official with China’s banking regulator that it did not name. The banking regulator did not respond to a request for comment. |
| Other investors are balking. One investor, surnamed Mr. Ma, said his losses had totaled $240,000. Mr. Ma, who requested that his first name not be published, has not yet told his family. He worries his wife will divorce him if she finds out. | Other investors are balking. One investor, surnamed Mr. Ma, said his losses had totaled $240,000. Mr. Ma, who requested that his first name not be published, has not yet told his family. He worries his wife will divorce him if she finds out. |
| Mr. Ma said he had decided to try Crude Oil Treasure after his restaurant was shut for weeks because of the coronavirus outbreak. He thought it could be a chance to make up lost revenue. Mr. Ma said he had trouble sleeping. At one point he began but did not complete a suicide note. | Mr. Ma said he had decided to try Crude Oil Treasure after his restaurant was shut for weeks because of the coronavirus outbreak. He thought it could be a chance to make up lost revenue. Mr. Ma said he had trouble sleeping. At one point he began but did not complete a suicide note. |
| Mr. Chen, the Crude Oil Treasure investor, works in administration at a factory in China’s manufacturing capital of Dongguan. He worried that he would face severe consequences if he did not pay the bank, like being added to a blacklist of debtors who cannot buy train tickets, travel or even attend certain events. | Mr. Chen, the Crude Oil Treasure investor, works in administration at a factory in China’s manufacturing capital of Dongguan. He worried that he would face severe consequences if he did not pay the bank, like being added to a blacklist of debtors who cannot buy train tickets, travel or even attend certain events. |
| “I feel like the Bank of China is bullying its customers because it is a big organization,” Mr. Chen said. | “I feel like the Bank of China is bullying its customers because it is a big organization,” Mr. Chen said. |
| But he relented. On Tuesday, he said, local police officers and Bank of China officials showed up at his office to speak with him and his colleagues, who had also invested in Crude Oil Treasure, and his managers. Feeling pressure, he agreed to a settlement that left him about $1,300, or about one-fifth of what he originally invested. | But he relented. On Tuesday, he said, local police officers and Bank of China officials showed up at his office to speak with him and his colleagues, who had also invested in Crude Oil Treasure, and his managers. Feeling pressure, he agreed to a settlement that left him about $1,300, or about one-fifth of what he originally invested. |
| “We did not want to get entangled in this incident,” Mr. Chen said. | “We did not want to get entangled in this incident,” Mr. Chen said. |
| Albee Zhang contributed research. | Albee Zhang contributed research. |