EB SECURITIES recently issued two information disclosures. The latest one appears somewhat unfavorable. On April 3, EB SECURITIES disclosed progress regarding its subsidiary's matters: a lawsuit filed overseas against the original selling shareholders of MPS company, alleging fraudulent misrepresentation, was dismissed by the High Court of England and Wales. This is not necessarily negative news. It only indicates that the grounds for the overseas lawsuit (fraudulent misrepresentation) did not align well with British legal principles and precedents; new claims and evidence must be prepared to seek redress. After all, for a 5.2 billion yuan acquisition, simply letting the overseas instigators off the hook would be a significant loss.

The overseas claim of the Jinxin Fund is USD 661 million. Although the main part of the lawsuit seems to have been dismissed by the English-Welsh court, EB SECURITIES' annual report additionally revealed that the Jinxin Fund has reached settlement agreements with some defendants. This implies that partial recovery of funds might be possible.

Furthermore, EB SECURITIES' annual report released on March 27 contained new developments regarding the MPS incident. Judgments were favorable for JUPAI and Oriental Asset.

EB SECURITIES' annual report disclosed that in January 2026, Everbright Capital received a judgment from the Shanghai Financial Court ordering it to pay Shanghai Longqian 45.16 million yuan. In February 2026, Everbright Capital appealed to the Shanghai High People's Court. In October 2025, Everbright Capital received another judgment where the Shanghai High People's Court ordered it to pay Yingtan Langtaosha 78.75 million yuan.

Background point one: Behind Shanghai Longqian is Dongxing Investment, which traces upward to Oriental Asset, one of the four major AMCs. The principal investment in MPS was 200 million yuan. The first-instance judgment ordered Everbright Capital to compensate 45.1562 million yuan in investment principal, representing 22.57% of Shanghai Longqian's 200 million yuan principal. According to EB SECURITIES' disclosure, Shanghai Longqian's lawsuit was based on "tort dispute." The first-instance court found Everbright Capital partially liable (22.57% of the principal).

Background point two: The underlying funds behind Yingtan Langtaosha are wealth management funds introduced by the third-party sales institution JUPAI Investment. The principal investment in MPS was 315 million yuan. The latest judgment requires Everbright Capital to compensate 78.75 million yuan in principal, representing 25% of the principal. Yingtan Langtaosha's lawsuit was also based on "tort dispute." In April 2025, the Shanghai Financial Court initially ordered Everbright Capital to pay Yingtan Langtaosha 94 million yuan. Everbright Capital appealed to the Shanghai High Court. In October 2025, the second-instance judgment reduced the compensation amount from 94 million yuan to 78.75 million yuan.

Shanghai Longqian was an intermediate-level partner in the MPS fund, while Yingtan Langtaosha was a junior-level partner. Both sued Everbright Capital on grounds of tort and ultimately received judicial support. This indicates that, judicially, using tort as a basis can gain a certain degree of recognition from the courts in this case.

Following the MPS incident, the earliest entity to sue Everbright Capital for tort liability was Zhaoyuan Yongjin Partnership. Some legal documents related to Zhaoyuan Yongjin mentioned their reasoning for believing Everbright Capital committed tort: during the MPS fund raising, there were originally no promises of minimum investment returns to investors, nor any guarantee of full or partial principal recovery. Based on this, Zhaoyuan Yongjin paid an investment contribution of 600 million yuan in April 2016.

However, on February 2, 2019, Everbright Capital's parent company, EB SECURITIES, announced for the first time that Everbright Capital had signed a "Shortfall Guarantee Letter" with related parties of the fund's senior partners, China Merchants Bank and Huarui Bank, committing to bear the corresponding shortfall guarantee obligations if the two senior partners could not exit. According to relevant regulations, the capital preservation promise made by Everbright Capital was a clear violation of prohibitive rules and constituted major information that should have been disclosed as it affected investment decisions. Everbright Capital intentionally concealed this significant information, leading Zhaoyuan Yongjin to make an investment decision contrary to its true intent and suffer substantial losses.

Zhaoyuan Yongjin argued that Everbright Capital's actions constituted fraud and thus initiated litigation based on tort liability. Their claims later received partial support from the court.

Reviewing the entire project based on public disclosures, the MPS fund had a total of 11 investors. Excluding Everbright Capital and Baofeng Tech, there were nine others. Among them, China Merchants Wealth and Aijian Trust-Huarui Bank were senior partners. Everbright Capital has paid the full 400 million yuan principal and settled with Aijian Trust-Huarui Bank. Everbright Capital planned to pay 2.24 billion yuan to settle with China Merchants Bank, actually executed 1.81 billion yuan, with 430 million yuan still outstanding.

The remaining seven intermediate/junior partners are: 1. Zhaoyuan Yongjin (sued Everbright Capital in 2020, won) 2. Yingtan Langtaosha (sued Everbright Capital in 2024, won) 3. Shanghai Longqian (sued Everbright Capital in 2021, won after multiple rounds) 4. Kuntai-Hengxiang (sued in 2018, dismissed, appeal ongoing) 5. Gui'an Financial (sued Everbright Capital in 2021, won) 6. Shanghai Xingnai 7. Kehua Capital

Reviewing the litigation processes of the latter five yields rather sobering results.

Kuntai-Hengxiang: First initiated arbitration in November 2018, but ultimately to no avail—they sued the three executive partners of the MPS fund (including Everbright Jin Hui). After two years, Kuntai-Hengxiang's arbitration was supported, but all three defendants had no executable assets. Enforcement procedures were suspended in December 2020. In 2022, Kuntai-Hengxiang applied to add Everbright Capital as a person subject to enforcement, but withdrew the application in March 2023. In May 2024, Kuntai-Hengxiang sued Everbright Capital for tort liability, but the lawsuit was dismissed by the court in July 2025. In August 2025, Kuntai-Hengxiang appealed. In short: Kuntai-Hengxiang initially spent two years targeting Everbright Jin Hui, wasting time, and only sued Everbright Capital in 2024, only to have the first-instance lawsuit dismissed. Six years of circling suggests potential major issues in Kuntai-Hengxiang's legal strategy.

Zhaoyuan Yongjin: Sued Everbright Capital in 2020, seeking 600 million yuan in principal compensation. In 2021, the first-instance judgment ordered Everbright Capital to pay 30%, or 180 million yuan. In 2023, the second-instance judgment overturned the first-instance result, reducing the compensation to 135 million yuan. Zhaoyuan Yongjin applied for compulsory enforcement in August 2023, but Everbright Capital had no executable assets. The enforcement process concluded in March 2024.

Gui'an Financial: Sued Everbright Capital in 2021. In July 2023, the first-instance judgment ordered Everbright Capital to pay 30% of the principal. The second-instance judgment upheld the original ruling.

Combining this with the recent litigation outcomes for Yingtan Langtaosha and Shanghai Longqian, and reviewing the dispute process between Everbright Capital and the seven MPS fund investors (including China Merchants Bank): After the incident, Aijian Trust-Huarui Bank and China Merchants Bank quickly (2018-2019) named Everbright Capital, the entity above the MPS fund, as a defendant and froze substantial assets of Everbright Capital (including invested stocks and equity holdings). They successively obtained court judgments around 2020 supporting full principal repayment. Ultimately, settlements were reached with Everbright Capital: Aijian-Huarui recovered the full principal, while China Merchants Bank recovered most of its principal.

Kuntai-Hengxiang, also part of the first wave initiating legal proceedings, initially sued the three fund partners but not Everbright Capital, resulting in a victory with no assets to execute. Their second lawsuit against Everbright Capital failed, leaving them with no progress after six years.

The second wave (2020-2021) involved Zhaoyuan Yongjin, Gui'an Financial, and Shanghai Longqian, all of whom targeted Everbright Capital. By 2023, Zhaoyuan Yongjin and Gui'an Financial had won their cases. Shanghai Longqian lost its first-instance case in 2021.

The third wave (2024-2025) saw Yingtan Langtaosha, Shanghai Longqian, and Kuntai-Hengxiang all sue Everbright Capital for tort liability. Among them, Yingtan Langtaosha and Shanghai Longqian received partial support (compensation ratios exceeding 20%), while Kuntai-Hengxiang's claims were dismissed again.

Starting with Zhaoyuan Yongjin in 2020, subsequent lawsuits against Everbright Capital based on tort, except for Kuntai-Hengxiang, have largely been successful, receiving court support for 20%-30% principal compensation.

However, the core issue is that after compensating the senior partners China Merchants Bank and Huarui Bank approximately 2.21 billion yuan, by July 2023 when Zhaoyuan Yongjin first won its case, Everbright Capital名下 had no executable assets left, leading to the termination of enforcement.

The remaining five intermediate/junior investors now face the situation where, even if they win, Everbright Capital has no assets to execute against.

This is quite an awkward predicament. For example, Yingtan Langtaosha, associated with JUPAI, only sued Everbright Capital in 2024. But in reality, even before the lawsuit, Everbright Capital had no property executable as of 2023. They arrived very late to the proceedings.

Future developments to watch include several key points. Everbright Capital planned to pay 2.24 billion yuan to settle with China Merchants Bank, actually executed 1.81 billion yuan, with 430 million yuan still outstanding. This is crucial. Everbright Capital has had no executable assets since 2023, yet it still owes China Merchants Bank 430 million yuan. Will this 430 million be repaid? How? If not, China Merchants Bank's wealth management funds would face an additional 430 million yuan loss. Out of a total of 2.8 billion yuan in wealth management funds, only 1.81 billion yuan was actually recovered, leaving a gap of nearly 1 billion yuan. If Everbright Capital repays this 430 million, where will the money come from? If it comes from the parent company, EB SECURITIES, setting this precedent would attract the attention of other fund investors who have already won their lawsuits. Currently, this seems like a deadlock.

EB SECURITIES' annual report shows that Everbright Capital Investment Co., Ltd. has negative net assets of 1.124 billion yuan, revenue of -260 million yuan, and a net profit of -238 million yuan, indicating it is insolvent.

EB SECURITIES has already fully provisioned 4 billion yuan in impairment losses for this subsidiary, Everbright Capital. This means EB SECURITIES acknowledges that the past investment in Everbright Capital might be a total loss. It will be difficult for EB SECURITIES to continue injecting capital into Everbright Capital.

The primary solution likely lies overseas. Although EB SECURITIES disclosed on April 3 that its overseas lawsuit against the original MPS shareholders alleging fraudulent misrepresentation was dismissed by the High Court of England and Wales, this probably isn't the end. The battle overseas must continue. The Jinxin Fund's overseas claim is USD 661 million. Although the main lawsuit part seems dismissed, the annual report also revealed that the Jinxin Fund has reached settlement agreements with some defendants, implying potential partial fund recovery.

Regarding performance, EB SECURITIES reported 2025 revenue of 10.851 billion yuan, a 13.06% increase from 2024; net profit was 3.724 billion yuan, a 21.77% increase from 2024. Following a management reshuffle after 2020, EB SECURITIES' main business operations have remained stable, maintaining strong profitability. Rebuilding after the storm, overcoming various adverse factors to move forward, and simultaneously addressing the large legacy issues left by predecessors since the MPS incident, the management team led by Chairman Zhao Ling and President Liu Qiuming has faced significant challenges in recent years.