Insider trading trial proceeds

Source: Xinhua  |   2008-7-20  |     NEWSPAPER EDITION

DONG Zhengqing, the former president of China's sixth largest brokerage, went on trial for insider trading in Guangzhou, Guangdong Province on Friday, denying all charges and his earlier confession with police, the court said yesterday.

Dong was accused of tipping-off his younger brother Dong Dewei and former classmate Zhao Shuya about a Guangfa Securities' reverse-merger listing on the Shenzhen Stock Exchange (SZ).

The two other men are also being tried in the case at Tianhe District Court. The three defendants denied their culpable confessions in court, saying they made those statements under intimidation and inducement by police.

The brokerage went public on the reverse merger of Yan Bian Road, a SZ-listed stock, on June 2, 2006.

The market speculation on the Guangfa Securities' back-door listing drove up the Yan Bian Road stock, which rose from 2.86 yuan (40 US cent) to 8.06 yuan between March and June 3.

Dong insisted in court that he was not involved in the listing procedure. He said that on June 2, 2006, he was on a business trip to southern Yunnan Province.

He said that the listing was conducted by two of his partners. Dong said he only got to know about the listing during his trip. Before then , the company had had several other choices for the reverse merger.

Dong reasoned that since he was not involved in the trade, there was no way that he could have tipped it off as early as in February, 2006, when his brother and friend began to buy Yan Bian Road stock.

Dong Dewei and Zhao Shuya were charged for profiteering 50 million yuan and 1 million yuan, respectively, from selling the stock afterwards.

Both denied in court that they bought the stock after a tip-off from Dong, as they had previously confessed in police interrogations.