The man convicted of Hong Kong's biggest insider dealing case yesterday argued in the Court of Appeal that he made 'only' HK$1.68 million in profit from his HK$87 million of illegal trades, in a bid to reduce the fine.
Former Morgan Stanley managing director Du Jun is appealing against his conviction in the District Court in 2009 for insider dealing, and contesting his seven-year jail term and HK$23 million fine. The appeal court reserved judgment yesterday at the end of a four-day hearing.
His is the largest insider dealing case in Hong Kong in terms of the money involved, and drew the toughest sentence ever passed for a crime of this nature.
As a Morgan Stanley banker in 2007, Du helped client Citic Resources issue bonds to buy a Kazakhstan oilfield. He used the confidential information he received via e-mails on updates of the deal to trade Citic Resources shares. His BlackBerry record has been cited as evidence that he opened and scrolled through the e-mails to read the information regarding the deals.
Du traded shares worth HK$87 million on nine occasions between February and April 2007, before Citic Resources announced the deal the following month.
The District Court imposed a fine of HK$23 million based on the prosecutor's calculations of the profit Du made from selling 13 million shares - half of the Citic Resources shares he held - for HK$33.4 million in July 2007 after Citic Resources announced the deal in May.
But at yesterday's appeal hearing, his lawyer, John Griffiths SC, and junior counsel Maggie Wong Pui-kei, argued that Du suffered huge losses selling the rest of the Citic Resources shares after the stock slumped during the global financial crisis.
These losses offset the gains he made when he sold the shares in July 2007, leaving him with a net profit of HK$1.68 million from the trades. Du's lawyers asked the judge to take this into account with regards to the fine.
The Securities and Futures Commission got a court order to freeze HK$46 million of Du's assets. He was allowed to pay the HK$23 million fine from the frozen assets. Deducting the legal fees, there is about HK$7.5 million left. The commission is also asking the court to order Du to pay back the investors who suffered from his inside trades.
Du has already spent over two years in prison after he was convicted in September 2009.
Du, a Beijing-born investment banker, was fired by Morgan Stanley after the bank noticed his illegal trades and reported the case to the SFC.
He went back to Beijing for a year and was arrested when he returned to Hong Kong to collect a picture and a small air purifier from his old office.
In 2006, Du Jun's annual salary and bonus amounted to this much, in Hong Kong dollars