(Yicai Global) July 25 -- Reports that the Bank of Shanghai is unable to repay investors that poured money into a CNY27 billion (USD4 billion) wealth management product are untrue, according to the lender.

The product in question is actually a private equity investment fund run by a unit under Shanghai-based Fuxing Group, the bank said in a statement yesterday. The institution, which has engaged in a legal pursuit of the rumor starter, is one of the fund's custodian banks in the city.

Videos published online apparently showed depositors in the fund, which requires a minimum CNY1 million (USD147 million) stake, gathering at the lender's offices in Pudong New Area to complain after posts on social media platform WeChat said it was unable to repay investors.

They have complained to regulators, the Public Security Bureau and trade associations, the bank said, adding that investors have proposed the custodian banks go beyond their call of duty to hold investor meetings and preserve assets. The lender has tried to explain through multiple channels, but some investors are still being irrational, it said.

WMPs are a regulatory grey area in China, though Beijing drafted rules on July 20 to make the sector more transparent and reduce risk to educate investors and make clear how financial institutions should behave.

Yilong Wealth Management, a licensed private equity fund operator than manages several accounts invested in by high-net-worth clients, runs the fund in question. But Zhu Yidong, chairman of its parent Fuxing, has been out of contact since late June, leaving several institutions and hordes of private lenders in the lurch.

Editor: James Boynton