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Judgment was handed down in China's biggest stock manipulation lawsuit Tuesday, by the Beijing No 2 Intermediate People's Court.
The verdict was delivered after a record 10-month investigation and trial that focused on the rigging of more than 5 billion yuan (US$604 million).
The chief accused, 37-year-old Ding Fugen, was sentenced to four years imprisonment and fined 500,000 yuan (US$60,400), for rigging securities trading prices in accordance with the Criminal Law.
Ding was one of the six main operating figures with the Shenzhen-based China Venture Capital Company, who followed orders from their commander-in-chief Lu Xinjian (known as Lu Liang) and Zhu Huanliang. Lu and Zhu are reportedly at large and are to be tried in a separate lawsuit.
The judgment, the first ever penal sentence for rigging trading prices of securities, is a landmark decision in China's stock market development, experts said.
Meanwhile, the Shanghai Huaya Industrial Development Company was fined 23 million yuan (US$2.8 million) for aiding Lu in raising 770 million yuan (US$93 million) through financing.
Three officials from the company were Tuesday sentenced to two years and 10 months and two years and six months in jail.
The other two stock operators were also sentenced to fixed-term imprisonment and fines.
Lu and his followers once controlled 55.4 percent of all circulating securities of the 0048 stock of the Shenzhen-based Kangda'er Group, the predecessor of the Shenzhen China Venture Capital Company, said the verdict.
In this criminal case, civil compensation is not supplemented.
"We have received a suit on civil compensation caused by stock manipulation in the case. But the court failed to take it up," said a judge with the Beijing No 2 Intermediate People's Court, who asked not to be identified.
Currently, civil compensation cases involving fraudulent information disclosure in the securities market could be accepted by courts, according to a judicial interpretation by the Supreme People's Court, which was issued in January.
There is still no judicial stipulation on civil compensation resulting from market manipulation and insider trading.
"The court will reconsider the claim following the criminal judgment," said the judge.
Following the case, experts have urged for an upgrade of stock-related laws immediately to guarantee the interests of small investors.
"Fraudulent information disclosure and market manipulation could not be parted," said Wang Yuanhong, director of the State Information Center?s Finance and Stock Department.
"There is little evidence to support requests for civil compensation in cases of market manipulation under the current Securities Law," Wang said.
The Securities Law is currently being amended but has not yet been submitted to the National People's Congress, China's top legislature.
"Anyway, the verdict handed down has proved that China's stock market will be regulated by more legal means, instead of by mere administrative management and market order," he said.
The expert also said that Tuesday's judgment would provide a judicial precedent for similar ongoing lawsuits.
Another stock market scandal, a case involving Guangdong Yorkpoint Science and Technology Company on charges of manipulating the market, began its hearing at the Guangzhou Intermediate People's Court in South China last week.
(China Daily April 2, 2003)
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