A Chinese court on Monday handed down jail sentences of 18 to 30
months to three people for insider trading of a construction firm's
shares. Two of them were fined a total of 80.74 million yuan (11.2
million U.S. dollars).
The Lishui municipal intermediate people's court in the eastern
Zhejiang Province made a first instance judgement to sentence Luo
Gaofeng, the 27-year-old securities representative of the
Shanghai-listed Hangxiao Steel Structure, to 18 months jail for
disclosure of insider information.
The court jailed a former securities director of the company,
Chen Yuxing, for 2.5 years. Stock investor Wang Xiangdong received
18 months with a two-year reprieve for insider dealing. It
confiscated the illegal gains from the dealing, 40.37 million yuan,
and fined each 40.37 million yuan.
Chen, who quit Hangxiao Steel Structure in January 2007,
received information that the company was in talks with a partner
on a 30 billion yuan overseas construction project on Feb. 11. He
informed Wang, who bought more than 2.7 million shares the next
day.
Wang previously agreed to give 30 percent of the gains to
Chen.
Chen confirmed the news and got more details after he called his
former underling Luo on Feb. 12. He then told Wang to buy about 4.2
million shares on Feb. 13 and Feb. 14.
Wang sold the 6.96 million shares on March 16 after finding out
the securities regulatory authorities was planning to investigate
for insider dealing, and made a 40.37 million yuan profit.
Hangxiao's share price stood at 4.55 yuan on Feb. 12 last year
and 10.75 yuan on March 16 when Wang sold out his shares.
Luo and Chen said they would not appeal after Monday's court
ruling, while Wang said he was undecided whether to appeal or not
in the near future.
The Hangxiao case was the first since the China Securities
Regulatory Commission (CSRC) implemented new regulations in January
2007 on the release of financial information by listed
companies.
Hangxiao shares surged 9.35 percent to 12.87 yuan on Monday.
They reached a record high of 31.58 yuan after the stock market
manipulation, but plunged when authorities investigated the
case.
In May, the CSRC fined the firm 400,000 yuan for releasing
misleading information about contracts it was supposed to have
signed.
Company Chairman Shan Yinmu and President Zhou Jinfa were issued
warnings and each fined 200,000 yuan.
The Hangzhou Intermediate People's Court said in December it had
received 51 lawsuits by stock investors claiming 2.7 million yuan
of compensation for losses they suffered from the misleading
information.
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(Xinhua News Agency February 5, 2008)
