Bogus stocks tipster jailed

By Liang Yiwen  |   2008-11-5  |     NEWSPAPER EDITION

THE Pudong New Area People's Court has sentenced an unlicensed securities consultant to six years in prison for taking 9.2 million yuan (US$1.3 million) in illegal fees from his clients, authorities said yesterday.

The suspect, a Henan Province native surnamed Zhang, came to Shanghai in 2006 after working in a bank for several years.

He set up Jiujia Investment Management Co Ltd using falsified capital information.

Though he lacked a license from securities regulators, Zhang rented several rooms in a high-grade office building in Pudong and copied stock information and analysis from other firms onto his own Website in an attempt to create an image of a knowledgeable consulting service.

He bragged that his company had four PhDs, 12 other postgraduates, 10 listed company research experts and many professionals who had returned to China after studying or working abroad.

He said his company had inside relations with all listed companies and assured clients he could double their investment in a short time.

His consultants offered free advice at first, and attracted many paying clients as the entire stock market was rising at the time.

Clients who believed the company knew what it was doing poured in more than 9.2 million yuan in consulting fees in less than a year. Zhang used several million yuan to buy an expensive house and pay salaries to his staff, according to authorities.

As the stock market plummeted, Zhang even raised his fees. But as losses mounted, irate clients began looking for Zhang, and he and his staff disappeared.

After receiving reports of the case, Pudong New Area police caught Zhang in Henan Province.