Three people suspected of insider trading and disclosing illegal
information in one of the most notorious price-rigging activities
in China's stock market have been prosecuted.
Luo Gaofeng and Chen Yuxing, former employees of Shanghai-listed
construction company Hangxiao Steel Structure, and veteran stock
gambler Wang Xiangdong were formally charged by a local
procuratorate in East China's Zhejiang Province on Monday, for
"illegal activities" with the company's shares and generating
earnings totaling 40.73 million yuan.
Shares catapulted the previously little known company to instant
stock market stardom, on the back of a 34.4 billion yuan
construction and engineering project for public housing in Angola
earlier this year before it aroused the attention of the securities
regulator.
China Securities Regulatory Commission began investigating in
April and fined the company and its executives 700,000 yuan.
The maximum punishment under Chinese law could be 10 years'
imprisonment and fines of up to five times the illegal
earnings.
The local prosecutor told Chinese media that Hangxiao reached a
consensus on February 8 with the Hong Kong-based China
International Fund (CIF) for the Angola public housing project, a
contract the two sides started negotiating in November 2006, with
an estimated value of 30 billion yuan.
Three days later, Chen, who had just resigned from the
director's post at Hangxiao's securities affairs office, learned of
the project from company executives and instructed his alleged
accomplice Wang to purchase about 2.8 million shares in the
company.
Under the instruction of Chen, who obtained further information
about the Angola project from Luo - then serving as the securities
affairs representative at Hangxiao - Wang allegedly bought millions
more shares in Hangxiao in the coming days before dumping all his
nearly 7 million shares on March 15, when the pair heard the
regulator would intervene.
(China Daily December 5, 2007)
