Managing director at morgan stanley jailed 7 years for insider trading

Discussion in 'Wall St. News' started by MohdSalleh, Sep 18, 2009.

  1. Ex-Morgan Stanley banker jailed for 7 years in HK
    Ex-Morgan Stanley banker sentenced to 7 years in prison in Hong Kong insider trading case

    * By Dikky Sinn, Associated Press Writer
    * On Friday September 18, 2009, 7:03 am EDT

    HONG KONG (AP) -- An ex-Morgan Stanley banker was sentenced Friday to seven years in prison in Hong Kong's biggest insider trading case -- an "unprecedented" scam a judge said undermined the integrity of this leading Asian financial center.

    Du Jun, a former managing director of the Wall Street investment bank, also was fined about 23.3 million Hong Kong dollars (about $3 million).

    The 41-year-old Beijing-native showed little emotion as a Hong Kong judge chastised him for his "greed" and "dishonesty and fraudulence." Du risked making the illegal trades even though he was earning well over $2 million a year at Morgan Stanley.

    "The scale was unprecedented," Judge Andrew Chan said, referring to the millions Du used in his trades.

    Du's lawyer Alexander King declined to say whether his client would appeal, only saying "use your common sense."

    Du was convicted last week of nine counts of insider dealing for trading shares of Citic Resources Holdings Limited before the company's announcement of an acquisition in 2007. He was also found guilty of a tenth related charge for helping his wife to deal in the shares.

    The case marks the 10th conviction of insider trading since it was made a criminal offense in 2003 -- part of Hong Kong's effort to tighten regulation as it seeks to retain its status as a leading financial center.

    It is also the longest and most heavily contested trial on insider dealing in the territory, according to Hong Kong regulators, who were quick to hold up the sentence as evidence of their stepped-up efforts against financial malfeasance. In years past, the city's regulators have been criticized as toothless and favoring the business elite's interests.

    "This sentencing sends the strongest possible message to anyone tempted to commit insider dealing offense in the future," said Mark Steward, executive director of enforcement at the local security watchdog, the Securities and Futures Commission.

    Du was also banned from being a director or managing director of any listed company for five years.

    Du was accused of spending HK$86 million ($11.1 million) to buy 26.7 million shares in Citic Resources on nine occasions between February and April in 2007. During the period, he had access to confidential information as part of a Morgan Stanley team advising the listed company on a $1 billion purchase of an oil field in Kazakhstan and the issuing of bonds to finance the deal.

    He sold part of the shares in July 2007, two months after the announcement of the acquisition, reaping a profit of HK$33.4 million ($4.3 million).

    As a managing director at Morgan Stanley, Du earned a basic salary of HK$1.45 million ($187,000) plus a bonus of $2.3 million in 2006.

    Morgan Stanley came in for intense criticism from the judge following the conviction. The bank had approved some of his purchases and handled some of the trades.

    A bank spokesman declined to comment and referred to a statement issued last week that said the wrongdoing was "a violation of Morgan Stanley's values and policies."
  2. :confused: :p :D
  3. The only reason this guy was prosecuted was because he must have stepped on the toes of OTHER broker elites on the Street... otherwise... the SEC prosecuting an Elite within a primary dealer brokerage aint ever happening...
  4. He was prosecuted by the SFC of Hong Kong, not the SEC of the US.