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Saturday, 12 September 2009
Du earned just HK$2m from deals, court told
Hong Kong’s biggest insider trader may have earned only HK$2 million profit from his HK$87 million in illegal dealings, the District Court heard yesterday.
Hong Kong’s biggest insider trader may have earned only HK$2 million profit from his HK$87 million in illegal dealings, the District Court heard yesterday.
Former Morgan Stanley Asia managing director Du Jun on Thursday was found guilty of insider trading and of advising his wife, Li Xin, to deal in Citic Resources Holdings shares from February to April 2007.
Counsel Alexander King, fighting for a lighter imprisonment term and fine for his client Du, argued that the insider trader had earned only about HK$2 million from the illegal trading, instead of the HK$33.4 million claimed by the prosecution.
Du, 40, faces a maximum penalty of seven years in jail and a fine of HK$10 million.
According to previous insider dealing convictions, the fine imposed is usually determined by the amount of profit earned from the illegal dealings.
The prosecutor calculated Du’s profit based on the HK$33.4 million from his sale of 13 million shares, or half of its shareholding, in July 2007.
But King said Du suffered losses from selling some of the remaining shareholding, which offset the profit earned in the share sales in July 2007.
King did not provide details of these transactions in the court yesterday, but a court document showed Du had sold 10 million shares of Citic Resources at 98 HK cents each in December last year when the financial crisis was hitting the market.
This is much lower than the average price of HK$3.26 per share at which he bought the shares. On the sale of those 10 million shares, he lost HK$23.2 million.
However, Judge Andrew Chan Hing-wai raised doubts about whether he should take into account Du’s investment losses. “Should we consider the impact of the financial crisis?” Chan said after hearing mitigation by King. Du, who is from Beijing, remains in custody pending sentencing on September 18.
He used his own savings and borrowed HK$50 million from Morgan Stanley to buy shares in Citic Resources, an arm of mainland conglomerate Citic Group, nine times between February and April 2007, the court heard.
At the time, he was advising Citic Resources on a bond offering to finance oil asset acquisitions in Kazakhstan.
A person commits insider dealing if he uses confidential information not yet known to the public to trade in a listed company’s shares or to ask others to do so, to earn a profit or avoid losses.
In mitigation, King showed a number of letters by Du’s former bosses and friends, who described Du as “a loving husband”, “a son who takes good care of his parent” and a “workaholic who worked long hours daily and weekends”.
They said Du loved his job and was a caring person who helped pay for the nursing-home expenses of a 78-year-old friend in Beijing.
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Du earned just HK$2m from deals, court told
Defence counsel fights for lighter punishment
Enoch Yiu
12 September 2009
Hong Kong’s biggest insider trader may have earned only HK$2 million profit from his HK$87 million in illegal dealings, the District Court heard yesterday.
Former Morgan Stanley Asia managing director Du Jun on Thursday was found guilty of insider trading and of advising his wife, Li Xin, to deal in Citic Resources Holdings shares from February to April 2007.
Counsel Alexander King, fighting for a lighter imprisonment term and fine for his client Du, argued that the insider trader had earned only about HK$2 million from the illegal trading, instead of the HK$33.4 million claimed by the prosecution.
Du, 40, faces a maximum penalty of seven years in jail and a fine of HK$10 million.
According to previous insider dealing convictions, the fine imposed is usually determined by the amount of profit earned from the illegal dealings.
The prosecutor calculated Du’s profit based on the HK$33.4 million from his sale of 13 million shares, or half of its shareholding, in July 2007.
But King said Du suffered losses from selling some of the remaining shareholding, which offset the profit earned in the share sales in July 2007.
King did not provide details of these transactions in the court yesterday, but a court document showed Du had sold 10 million shares of Citic Resources at 98 HK cents each in December last year when the financial crisis was hitting the market.
This is much lower than the average price of HK$3.26 per share at which he bought the shares. On the sale of those 10 million shares, he lost HK$23.2 million.
However, Judge Andrew Chan Hing-wai raised doubts about whether he should take into account Du’s investment losses. “Should we consider the impact of the financial crisis?” Chan said after hearing mitigation by King. Du, who is from Beijing, remains in custody pending sentencing on September 18.
He used his own savings and borrowed HK$50 million from Morgan Stanley to buy shares in Citic Resources, an arm of mainland conglomerate Citic Group, nine times between February and April 2007, the court heard.
At the time, he was advising Citic Resources on a bond offering to finance oil asset acquisitions in Kazakhstan.
A person commits insider dealing if he uses confidential information not yet known to the public to trade in a listed company’s shares or to ask others to do so, to earn a profit or avoid losses.
In mitigation, King showed a number of letters by Du’s former bosses and friends, who described Du as “a loving husband”, “a son who takes good care of his parent” and a “workaholic who worked long hours daily and weekends”.
They said Du loved his job and was a caring person who helped pay for the nursing-home expenses of a 78-year-old friend in Beijing.
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