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. Last Updated: 07/27/2016

Spate of Fund Closures Jolts Investors

Fifteen investment firms across the country have closed down over the past 45 days, depriving thousands of private investors of their savings, a consumers' rights advocate said Tuesday.

Rostislav Kokorev, head of the financial services department at the Confederation of Consumers' Societies, Russia's leading consumer rights organization, told a news conference that Russian investors are less protected against financial fraud than ever before, despite the government's promises to regulate Russia's chaotic financial market.

"Quotations of many shares crashed in September and October," Kokorev said. "Some companies disappear, others suspend their operations, and for some reason no one is prosecuting."

This month, the widely-advertized investment company Art-Finans indefinitely suspended operations after offering exorbitant interest on deposits, Kokorev said.

He said 14 other firms have halted operations in the past 1 1/2 months, giving investors little or no explanation.

After the sensational collapse of the MMM pyramid scheme in July, the Russian government pledged to take urgent steps to rein in the country's wild financial market. However, Kokorev said, authorities have shown little concern for private investors as shadowy companies have continued attracting billions of rubles.

Although most of the 15 firms say their operations are only "suspended," Kokorev predicted none of them was likely to resume operations.

He said so far only one investment company, Russian House of Selenga, has done so, resuming operations earlier this month after a two-month pause.

Kokorev said experts at the Confederation have begun investigating the activities of the Tibet investment firm and its subsidiaries in order to help compensate investors.Tibet, one of Russia's largest investment companies, suspended operations two months ago, robbing an estimated 150,000 private investors. According to the Central Bank data, Tibet had attracted 1.4 trillion rubles in deposits.

The consumer group offered to help in the search for the Tibet money after tax officials put off an investigation of the company because, Kokorev said, they complained of not having enough money.

"If we succeed with Tibet and find the money to repay investors, we will continue working in this direction," said Kokorev.