The Shanghai branch of the China Insurance Regulatory Commission reportedly said police were probing Shanghai Fanxin Insurance Agency after it was found to have sold unauthorised wealth management products, a sector of growing regulatory concern in recent months.

The investigation began after Chen Yi, Fanxin's chief executive, fled with an unspecified amount of money, the report said. Local media reported that Chen took RMB500 million ($81.7 million) from the company before leaving the Mainland. Shanghai police reportedly said they would not disclose details of the case.

Fanxin was still operating but industry officials with knowledge of its situation said the company had had financial problems since its illegal sales of wealth management products, the SCMP reported.

"The aggressive and bold business tactics caused its trouble and forced the boss to flee," said one source. "Its fate was predestined,” the source was quoted as saying.

The regulator said the wealth management products were created by Fanxin itself and that the firm was actively assisting police in its investigation. Founded in 2007, Fanxin is one of the largest insurance brokers in Shanghai.

There have been mounting fears that such products, offering high yields to investors frustrated by poor cash returns elsewhere, were ripe for trouble. Late last year, a wealth management product sold by a Shanghai branch of Huaxia Bank caused a stir when dozens of investors were informed that Zhongding Wealth Investment Centre, the borrower, would default on repayment, the newspaper report noted.

Recent moves by the Chinese authorities to crack down on potentially risky wealth management products have cut the number of new products and their yields. Chinese banks and financial institutions in April issued 2,439 wealth management products, a kind of high-interest deposits, a 12.8 per cent drop from the level in March, according to Bankrate.com.cn.