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September 11, 2009

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Ex-banker faces jail for insider trading

A FORMER Morgan Stanley banker was convicted of insider trading yesterday in Hong Kong's longest criminal trial of its kind.

Du Jun, former managing director of the New York-based investment bank, was found guilty on nine counts of insider dealing. He was also convicted of a 10th related charge for helping his wife to deal in the shares of CITIC Resources Holdings Ltd before the company's announcement of an acquisition in 2007.

Du, who was taken into custody after the verdict, faces a prison sentence of up to seven years, the maximum that can be handed down by Hong Kong's District Court.

The case was adjourned to today when the judge will hear mitigation pleadings from Du's attorney.

The case marks the 10th conviction of insider trading since it was made a criminal offense in 2003 - part of Hong Kong's effort to tighten regulation as it seeks to retain its status as a leading financial center.

It is also the longest and most heavily contested trial on insider dealing in the territory, said Mark Steward, executive director of Securities and Futures Commission.

Du was accused of spending HK$86 million (US$11.1 million) to buy 26.7 million shares in CITIC Resources on nine occasions between February and April in 2007. During the period, he had access to confidential information as part of a Morgan Stanley team advising the listed company on a US$1 billion purchase of an oil field in Kazakhstan and the issuing of bonds to finance the deal.

He reportedly reaped about HK$33 million in profits two months after the announcement of the acquisition.

Handing down the verdict, Judge Andrew Chan said Du must have understood the risks he was taking as he has a master's degree in international banking and finance and worked at various investment banks.


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