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Hong Kong – Court Of Appeal Upheld Insider Dealing Convictions.

 15 October, 2012

 

In September 2012, the Court of Appeal upheld the insider dealing convictions of Mr. Du Jun, former managing director of Morgan Stanley Asia Ltd, for insider dealing in shares of CITIC Resources Holdings Ltd (CITIC Resources), but reduced Du’s term of imprisonment from seven years to six years and lowered the fine from HK$23.3 million to HK$1.688 million.
 
The Court of Appeal upheld the trial judge’s findings that: 
 
• on nine occasions between 15 February and 30 April 2007, Du purchased a total of 26.7 million shares of CITIC Resources for $86 million while he was part of a team of Morgan Stanley’s bankers advising Hong Kong-listed CITIC Resources on a proposed deal to acquire oil field assets in China; and
• Du counseled or procured his wife to deal in CITIC Resources shares on 27 February 2007.
 
In reducing the fine, the Court of Appeal took into account the ongoing civil proceedings commenced by the SFC against Du under section 213 of the SFO in which the SFC is seeking remedial orders against Du for the benefit of his trading counterparties. 
 
The Court of Appeal considered that “the laudable objective of the section 213 proceedings … would in the particular circumstances of this case be defeated if fines were imposed at the expense of counterparties entitled to damages”.

 

 

For further information, please contact:
 
Tony Grundy, Partner, Morrison Foerster
tgrundy@mofo.com
 
John Moore, Partner,  Morrison Foerster
johnmoore@mofo.com

 

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