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Gold futures pair just intermediaries, court told

TWO women found guilty of offering a gold futures investment service without a license argued at their appeal hearing yesterday that they were just intermediaries for an overseas company.

"Even if they were wrong to be intermediate agents, they should bear a fine only, but not criminal punishment," said Shang Jiangang, lawyer for Liu Xi, 26, who was sentenced to five years in prison for illegal business operation at her trial. Liu's accomplice, Nie Mingzhan, 27, was also jailed for five years.

At their first trial it was said the two caused eight local investors to lose about 4 million yuan (US$583,600), while earning commission of 950,000 yuan.

The two formed a so-called overseas investment department affiliated to Shanghai Tongrong Investment Management Co Ltd in November 2007, when gold futures prices were high. But Tongrong didn't have a license for gold trading.

They reached an agreement with Hong Kong-based ASA Global Financial Ltd, a licensed agency for investment in the London gold market, to recruit investors.

Investors paid US$100 commission to ASA for every transaction and Liu and Nie shared half the commission, the Shanghai No. 1 Intermediate People's Court heard yesterday.

But it is illegal for individuals to carry out international gold futures transactions in the Chinese mainland though it is legal in Hong Kong.

The duo offered minimum profit of 40 percent on their investments, said Peng Zhijiu, a client who invested 2 million yuan, in written testimony.

Peng said he trusted Liu and Nie to make transactions for him since they claimed Tongrong had top analysts and operators. But they lost his money in a week.

Liu and Nie denied they had made investments for clients. They said investors made transactions directly with ASA and they couldn't control how much clients invested.

They said Tongrong should bear responsibility because they offered the service in the name of the company. They were just employees.

The court didn't announce a verdict yesterday.


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