Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
Trader gets 4 years in prison for illegal deals
Created: 2012-11-24 1:49:44
LI Xuli put on a brave face - smiling at the crowd - as he arrived at the Shanghai No.1 Intermediate People's Court yesterday but the leniency the former fund manager was expecting did not happen.
Li, 39, who hit the headlines in August 2011 when he was busted for insider trading, was sentenced to four years in prison by the court and ordered to pay a fine of 18 million yuan (US$2.9 billion).
The court also ruled that Li had to return the 10.7 million yuan he made in illegal profits from the two stocks whose inside information he had.
For a star fund manager at the Shanghai-based Bank of Communications Schroders Fund Management Co, whose sense of investment with high returns that often beat industry average, Li's fall from grace has been complete.
His lawyer Zhu Youbin said he wasn't sure if Li would appeal the verdict, which Zhu said was "not reasonable enough."
"The evidences are not sound and the verdict is based more on assumptions than it should," Zhu said, who had entered a not guilty plea. "I would certainly appeal if I were Li, but I will discuss it with him next week to see if we really wants to."
But the court said confessions by Li and other players in the scandal corroborated with each other. The court also turned down the defendant's plea for a reduced penalty as he did not turn himself in and did not reveal the truth to police after he was held.
Li has 10 days to appeal.
Li was detained last August on suspicion of "rat trading," a Chinese expression for insider trading where fund managers rake in profits with inside information they have.
Li, who should not have been trading shares as an industry insider, according to Chinese law, had access to two accounts which he operated under the name of a relative and an acquaintance of his wife.
Having already spent 15 months in detention, Li will have to spend another 33 months in jail if the full four-year term is applied.
"The verdict is reasonable and not too lenient as we have seen other more serious insider trading cases get a reprieve," said Zheng Mingwei, a lawyer with Guangzhou-based Jing Tian Law Firm.
"There has not been any detailed legal interpretation on such 'rat trading' cases ... this verdict should help in future deliberation," Zheng said.
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