SINGAPORE Dec 12 A former Morgan Stanley
banker convicted of insider trading will have to pay more than
290 investors a total of HK$23.9 million ($3.08 million) they
lost out on, a Hong Kong court ordered on Thursday, in an
unprecedented legal ruling.
Du Jun, a former banker for Morgan Stanley Asia Limited, was
ordered by Hong Kong's Court of First Instance to make the
payment for using inside information when he traded shares in
CITIC Resources Holdings Ltd in 2007.
The case marks the first time in Hong Kong that the
Securities and Futures Commission (SFC) has successfully managed
to win a court order forcing an individual insider trader to pay
investors money they lost out on as a result of trading with him
It also contrasts with the approach taken by most other
regulators, including the United States and Britain, which tend
to levy fines for insider trading that go into government
coffers rather than returning money to investors.
"The investors had no means to detect they were dealing with
Du, who was engaged in illegal insider dealing," the SFC's
enforcement head Mark Steward said in a statement.
"This case sends a clear message that the consequences of
wrongdoing, including the costs of restoration or remediation,
should be met by wrongdoers and not be borne by innocent
investors or the market," he added.
A spokesman for Morgan Stanley in Hong Kong declined to
comment on the matter.
Du was convicted in 2009 of insider trading and sentenced to
seven years in jail. The term was reduced to six years in 2012
following an appeal, though it still marks the longest sentence
ever given in Hong Kong for the offence.
This case, heard in the civil courts, was only resolved now
following the end of criminal proceedings against Du.
Du had been part of the Morgan Stanley team advising CITIC
Resources on a proposed deal to buy oil field assets in China
when he traded in their shares.
The HK$23.9 million represents the difference between the
price at which the affected investors sold shares in CITIC
Resources to Du and the price at which they could have sold the
shares had the price sensitive information related to the deal
been known by the market at the time.