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Dynamic investor denies false markets charge

Felix Lo

A man accused of creating a false impression of active trade in a property stock had been buying and selling shares even before he came under payment pressure from a stockbroker, a court heard yesterday.

Zou Yishang pleaded not guilty in the Eastern Court to one charge of creating false markets and trading. He allegedly traded the stock of Dynamic Holdings between December 7, 2001, and January 18, 2002, using various trading accounts of Able Technology, of which he was a controlling director and shareholder, and that of his wife, Cui Xia.

The court earlier heard that Dynamic surged 62 per cent from $1.84 to $3 between December 18, 2001, and January 14, 2002. It then plummeted 20 per cent to $2.40, but turnover remained high.

On December 7, 2001, for example, turnover was boosted after Zou bought 1,562,000 and sold 800,000 shares, representing 99.4 per cent and 50.9 per cent of market turnover respectively, of which 50.9 per cent was found to be wash sales - apparent buying and selling with no change of ownership.

Zou was also accused of buying 778,000 and selling 900,000 Dynamic shares on January 10, 2001, which represented 73.2 per cent and 84.7 per cent of market turnover respectively, but 68.7 per cent of that constituted wash sales.

He had opened trading accounts at CAF Securities, Guotai Junan Securities, ICEA Securities and Tanrich Securities.

His margin limit at Tanrich was raised from $4 million to $6 million at one stage.

Tanrich settlement manager Wong Yuen-ling testified that the securities company had issued a total of 24 margin call letters calling for $220,000 from Zou between December 13, 2001, and January 31, 2002, in order to close the position.

The case continues this morning.

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