In November 2024, the Head of Marketing at High-Flyer Quant, Li Cheng, was detained as he was being accused of accepting illegal commissions through the Chinese quantitative hedge fund. What is interesting about this scandal is that this is the same company that bankrolled the AI startup DeepSeek, which is now the direct competitor of firms like OpenAI. Unfortunately, with new details coming forth, could the parent company director’s actions pull down the reputation of what could be a promising future for an artificial entity? Let us discuss below.
The illegal scheme’s duration ran until 2023, with brokerage rebates going up to $16 million, of which DeepSeek’s parent company’s Head of Marketing pocketed almost $3 million
The information surrounding the investigation that was published by MyDrivers mentions that the payments were being funneled through China Merchants Securities (CMS), but Li Cheng also had some help to become richer through illicit means. His “partner in crime” was Meng Pengfei, the former manager of CMS at the Shenzhen branch. The report mentions that despite brokerage firms being forbidden from returning commissions to clients, the money kept pouring in, reaching 118 million yuan, or $16 million.
Out of the amount mentioned above, Li Cheng became 20 million yuan richer, with Meng Pengfei pocketing the lion’s share of the corrupted funds—80 million yuan, or $11 million, to his name. Additionally, to prevent any eyebrows from being raised, Liu Huan, CMS’s private wealth executive, received 10 million yuan, or $1.37 million, as a form of a thank-you. Unfortunately, this entire scheme came tumbling like a pack of cards, as all illegal activities eventually do.
When authorities finally got a whiff of what was transpiring, DeepSeek’s parent company stated that Li Cheng acted in a personal matter and that High-Flyer Quant was not to be considered an accomplice. It should be mentioned that Meng tried to keep the news from blowing up, including paying 3 million yuan ($417,600) in gold bars to CMS leadership to avoid scrutiny.
Since DeepSeek is entirely funded and controlled by High-Flyer Quant, we cannot help but think about how the AI startup’s reputation can also be tarnished as a result of an executive’s greed. Liang Wenfeng, the CEO of DeepSeek, also co-founded High-Flyer Quant, so it is likely that he will be questioned on this scandal. However, given that there is no mention of him in the report, the Head of Marketing will probably receive a hefty sentence.
News Source: MyDrivers
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