Signal Mountain: "Stock Recommendation Commission" Is Actually a Rise-and-Fall Betting Game Where Retail Investors' Principal Becomes Institutional Betting Chips

This year’s “3.15” Gala exposed a typical “stock recommendation profit sharing” scam. A company called “Xin Ben Ke,” an information consulting firm, without any financial licensing, used cold calls to induce investors to buy so-called “institutional research tickets,” promising a 50-50 profit split. When stocks plummeted and clients suffered losses, the customer service disappeared, and “covering losses” became a tactic to lure investors into building positions.

The core temptation of the “stock recommendation profit sharing” model lies in creating a false illusion of “interest binding.” According to the agreement, the stock recommendation agency does not charge upfront fees; they only share profits when stocks are profitable, and they will make up for losses. As a result, investors believe that as long as they follow instructions, the worst-case scenario is breaking even or making a profit. The stock recommendation agencies exploit this psychology to lure participants into a “guaranteed profit” business.

The promises made over the phone sound wonderful, but in reality, good luck doesn’t fall into investors’ laps. Undercover reporting revealed the truth: these recommended stocks are not based on research from multiple institutions or insider information, but are stocks personally designated by the company’s owner. This also exposes that these stock recommendation agencies are not as mutually beneficial as investors think; otherwise, how could stock picks be so arbitrary? After stocks fall sharply, customer service disappears, and their words—“no one knows whether that stock is profitable or not, just betting on probabilities”—confirm that there is no such thing as “covering losses.”

The so-called “profit sharing and loss covering” of these stock recommendation agencies is essentially a “gambling on probabilities” business model. The more stocks they recommend and the more investors participate, the higher the chance of stocks rising. When stocks go up, clients share the profits; when stocks fall, they simply disappear, with almost zero cost. This betting pattern ensures the agency profits regardless of stock performance. For investors, this game is doomed from the start—it’s not investing but providing capital for the agency’s “probability game.”

What investors should pay more attention to is that the company called “Xin Ben Ke” does not include securities investment consulting in its scope of business, nor has it obtained any financial licensing. This means that the “stock recommendation profit sharing” business has been illegal from the outset. The Securities Law of the People’s Republic of China clearly states that engaging in securities investment consulting must be approved by the China Securities Regulatory Commission. These “stock recommendation profit sharing” agencies disguise themselves as “information consulting firms” or impersonate legitimate private funds, deceiving investors through information asymmetry.

The “covering losses” promised by these agencies is essentially an empty check with no legal effect, and there are no institutional guarantees to fulfill this promise. When investors suffer losses and exit, the agencies have already moved on to their next target. When investors seek rights protection, they face the dilemma of not knowing who the other party is, where the company is located, or whether there is a contract.

From start to finish, “stock recommendation profit sharing” is not a partnership investment but a game of information asymmetry. Investors put real money on the line, while the agencies hold empty checks as chips. Only when stocks fall sharply do investors realize they have become the chips themselves.

Xinwang Commentator Sun Baozhen

【Source: Xinwang】