Hong Kong Banker Gets Tough Sentence

"Hong Kong Banker Gets Tough Sentence | AboutHK.Com - More Information About HK"

JONATHAN CHENG A judge sentenced former Morgan Stanley banker Du Jun to seven years in prison and fined him 23.3 million Hong Kong dollars ($3 million) for insider trading. The sentence handed down Friday, the longest in Hong Kong's history for an insider-trading case, is the maximum that could be imposed. Hong Kong District Court Judge Andrew Chan said the scale of Mr. Du's insider trades was "unprecedented." Mr. Du was convicted Sept. 10. Hong Kong's previous longest sentence for an insider-trading conviction was a 26-month term handed out in April. Mark Steward, head of enforcement for Hong Kong's financial-regulatory agency, the Securities and Futures Commission, said Friday that the verdict "sends the strongest possible message to anyone tempted to try an insider-dealing offense" that the penalties would be severe. Mr. Du, 41 years old and a former managing director in Morgan Stanley's fixed-income division, bought $11 million of Citic Resources Holdings Ltd. shares while he was advising the company on buying oil-field assets in Kazakhstan and northeastern China. He sold about half of the shares in July 2007, after the deals were announced, reaping a profit of about HK$33.4 million in the process. Mr. Du also was convicted for advising his wife, Sharon Li, to deal in Citic Resources. His wife isn't facing any charges. The case came to light after Morgan Stanley reported the matter to the SFC. Mr. Du sought approval from his superiors and from Morgan Stanley's internal compliance department before making his trades, and used a Morgan Stanley broker to conduct his transactions. An officer at the investment bank said later that she was confused about which securities Mr. Du intended to trade. In delivering his sentencing Friday, Judge Chan said Mr. Du had sought "quote-unquote approval" in a dishonest manner, and ignored several warnings from his colleagues to stop trading. "I can't think of any reason other than sheer greed to drive the defendant to the present situation," Judge Chan said. Asked if Mr. Du plans to appeal his conviction, his lawyer, Alexander King, said only: "Use your common sense." Write to Jonathan Cheng at jonathan.cheng@wsj.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it