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Friday, 18 September 2009
Ex-Morgan Stanley banker jailed for 7 years
A Hong Kong court on Friday sentenced a former senior banker at Morgan Stanley to seven years in jail -- the heaviest punishment it can impose -- in the city’s largest insider dealing case.
HONG KONG (AFP) - – A Hong Kong court on Friday sentenced a former senior banker at Morgan Stanley to seven years in jail -- the heaviest punishment it can impose -- in the city’s largest insider dealing case.
Du Jun was convicted on 10 charges for buying 87 million Hong Kong dollars (11.2 million US) worth of shares in CITIC Resources when he was advising the firm on oil-field acquisitions in Kazakhstan and northeastern China.
He made a profit of more than 30 million dollars from selling some of the shares in 2007, after the announcement of the acquisitions sent the share value up.
In sentencing, District Court Judge Andrew Chan said: “The scale was unprecedented. This case is the biggest I have come across so far.”
The judge said Du was motivated by “sheer greed” and had “seriously undermined the integrity of the financial markets.”
He noted that the 41-year-old had been warned twice by his superior against trading the shares, but he refused to listen to the advice.
Judge Chan sentenced Du to seven years and three months and imposed a fine of 23.32 million dollars. But the prison term had to be reduced to seven years as it was the maximum penalty the District Court can impose.
The judge also ordered that Du be prevented from dealing in securities and taking up directorship positions in listed companies for a period of five years.
The Securities and Futures Commission (SFC), the city’s financial regulator, hailed the outcome of the case as the biggest deterrent against market misconduct crimes.
“The sentence is the strongest possible message to anyone tempted to commit insider dealing offences in the future,” Mark Steward, the regulator’s head of enforcement, said outside court.
David Webb, a shareholder activist and a former non-executive director of the Hong Kong Stock Exchange, said he expected the SFC to bring forward more insider dealing prosecutions in the near future.
“To build an effective deterrent against insider dealing, you need a track record of successful prosecutions,” he told AFP.
“The SFC is certainly building that track record. And we will see more of these cases in the future.”
The conviction was the tenth secured by the SFC on insider dealing since July last year and the fourth that resulted in jail terms.
The court heard that on nine occasions in 2007 the banker bought a total of 26.7 million shares in CITIC Resources, an arm of China’s largest investment conglomerate CITIC Group, before the firm publicly announced its acquisition of a Kazakhstan oil field.
Du sold about half of the shares he acquired in the company two months after the deal was announced in May 2007, and reaped a profit of about 33.4 million Hong Kong dollars.
The announcement, marking the Hong Kong-listed company’s move to turn itself from a metal to an oil producer, concerned not only the oilfield acquisitions but also its issuance of one-billion dollar bonds to finance the deals.
Du, who had pleaded not guilty to all 10 charges, also advised his wife Li Xin, who has not been charged, to deal in CITIC Resources shares around the same time.
The case also brought to light the faulty internal compliance system inside Morgan Stanley, observers say, as evidence emerged that Du’s trading in the shares had been approved by the compliance department on several occasions.
Insider dealing was made a criminal offence in Hong Kong in 2003, marking the government’s move to catch up with overseas jurisdictions’ effort in their clamp down on market misconduct.
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Ex-Morgan Stanley banker jailed for 7 years
AFP
18 September 2009
HONG KONG (AFP) - – A Hong Kong court on Friday sentenced a former senior banker at Morgan Stanley to seven years in jail -- the heaviest punishment it can impose -- in the city’s largest insider dealing case.
Du Jun was convicted on 10 charges for buying 87 million Hong Kong dollars (11.2 million US) worth of shares in CITIC Resources when he was advising the firm on oil-field acquisitions in Kazakhstan and northeastern China.
He made a profit of more than 30 million dollars from selling some of the shares in 2007, after the announcement of the acquisitions sent the share value up.
In sentencing, District Court Judge Andrew Chan said: “The scale was unprecedented. This case is the biggest I have come across so far.”
The judge said Du was motivated by “sheer greed” and had “seriously undermined the integrity of the financial markets.”
He noted that the 41-year-old had been warned twice by his superior against trading the shares, but he refused to listen to the advice.
Judge Chan sentenced Du to seven years and three months and imposed a fine of 23.32 million dollars. But the prison term had to be reduced to seven years as it was the maximum penalty the District Court can impose.
The judge also ordered that Du be prevented from dealing in securities and taking up directorship positions in listed companies for a period of five years.
The Securities and Futures Commission (SFC), the city’s financial regulator, hailed the outcome of the case as the biggest deterrent against market misconduct crimes.
“The sentence is the strongest possible message to anyone tempted to commit insider dealing offences in the future,” Mark Steward, the regulator’s head of enforcement, said outside court.
David Webb, a shareholder activist and a former non-executive director of the Hong Kong Stock Exchange, said he expected the SFC to bring forward more insider dealing prosecutions in the near future.
“To build an effective deterrent against insider dealing, you need a track record of successful prosecutions,” he told AFP.
“The SFC is certainly building that track record. And we will see more of these cases in the future.”
The conviction was the tenth secured by the SFC on insider dealing since July last year and the fourth that resulted in jail terms.
The court heard that on nine occasions in 2007 the banker bought a total of 26.7 million shares in CITIC Resources, an arm of China’s largest investment conglomerate CITIC Group, before the firm publicly announced its acquisition of a Kazakhstan oil field.
Du sold about half of the shares he acquired in the company two months after the deal was announced in May 2007, and reaped a profit of about 33.4 million Hong Kong dollars.
The announcement, marking the Hong Kong-listed company’s move to turn itself from a metal to an oil producer, concerned not only the oilfield acquisitions but also its issuance of one-billion dollar bonds to finance the deals.
Du, who had pleaded not guilty to all 10 charges, also advised his wife Li Xin, who has not been charged, to deal in CITIC Resources shares around the same time.
The case also brought to light the faulty internal compliance system inside Morgan Stanley, observers say, as evidence emerged that Du’s trading in the shares had been approved by the compliance department on several occasions.
Insider dealing was made a criminal offence in Hong Kong in 2003, marking the government’s move to catch up with overseas jurisdictions’ effort in their clamp down on market misconduct.
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