A Hong Kong court yesterday sentenced a former senior banker at Morgan Stanley to seven years in jail - the heaviest punishment it can impose - in the city's largest insider dealing case.
Du Jun was convicted on 10 charges for buying $11.2 million worth of shares in CITIC Resources when he was advising the firm on oil-field acquisitions in Kazakhstan and northeastern China.
He made a profit of more than $30 million from selling some of the shares in 2007, after the announcement of the acquisitions sent the share value up.
In sentencing, District Court Judge Andrew Chan said: "The scale was unprecedented. This case is the biggest I have come across so far."
The judge said Mr Du's act was motivated by "sheer greed" and had "seriously undermined the integrity of the financial markets". He noted that the 41-year-old had been warned twice by his superior against trading the shares, but he refused to listen to the advice.
Judge Chan sentenced Mr Du to seven years and three months, and imposed a fine of $23.32 million. But the prison term had to be reduced to seven years as it was the maximum penalty the District Court can impose.
The judge also ordered that Mr Du be prevented from dealing in securities and taking up directorship positions in listed companies for five years.
The Securities and Futures Commission, the city's financial regulator, hailed the outcome of the case as the biggest deterrent against market misconduct crimes.
"The sentence is the strongest possible message to anyone tempted to commit insider dealing offences in the future," Mark Steward, the regulator's head of enforcement, said outside court.
The court heard that on nine occasions in 2007, the banker bought a total of 26.7 million shares in CITIC Resources, an arm of China's largest investment conglomerate CITIC Group, before the firm publicly announced its acquisition of a Kazakhstan oil-field.
Mr Du sold about half of the shares he acquired in the company two months after the deal was announced in May 2007, and reaped a profit of about HK$33.4 million.
The announcement, marking the Hong Kong-listed company's move to turn itself from a metal to an oil producer, concerned not only the oilfield acquisitions, but also its issuance of $1 billion bonds to finance the deals.
Mr Du, who had pleaded not guilty to all 10 charges, also advised his wife Li Xin, who has not been charged, to deal in CITIC Resources shares around the time.