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December 9, 2009

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Unlicensed trader gets 6-year sentence

A stock analyst was sentenced to six years in prison yesterday for making stock investments for clients without a license and causing 39 clients to suffer huge losses of 7.7 million yuan (US$1.1 million) during the bull market.

Jing'an District People's Court also imposed a fine of 3 million yuan on Shanghai Heyin Investment Management Co Ltd, the company owned by the analyst, Hao Gang.

From November 2005 to July 2007, Hao attracted 39 clients with 36 million yuan to invest.

Clients were required to open accounts in securities Hao chose.

To earn high commissions, Hao traded stocks at high frequency, using the clients' money directly.

He even bought stock shares at high prices and sold them at low prices, the court heard.

"His real purpose was to earn commissions, not to win profits for clients," a victim surnamed Li told the court.

The clients suffered a total loss of more than 7.7 million yuan in the bull market while Hao earned 2.8 million yuan in commissions.

Hao disappeared in June 2008 after he couldn't cover losses of the clients. He was caught in Liaoning Province this June.

Hao got his start in 2004 as a stock analyst by writing articles about the market for newspapers.

His accurate predictions of market trends won him a strong reputation among investors.

He used that reputation to found his company.


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