Rogue trader gets away with a fine - because he lost cash on insider deals

A former fund manager with Franklin Templeton Sealand Fund Management has become the latest rogue trader to be exposed by the mainland regulator as Beijing intensifies its crackdown on market irregularities.

Huang Lin, a 32-year-old fund manager convicted of front-running to trade shares on his own behalf between March 2007 and April 2009, was, however, exempted from further criminal investigations, according to the China Securities Regulatory Commission.

Huang was found to have conducted inside trades in eight stocks, but he lost 54,000 yuan (HK$64,800) in the process.

He was fined 300,000 yuan and has been banned from working for securities firms for 10 years.

'He was lucky since he lost money,' said Gong Zhenhua, a partner at Shanghai Ronghe Law Firm. '[On the mainland] gains and losses are important factors in gauging the severity of unlawful behaviour.'

Huang was the eighth 'rat trader' - a fund manager who uses other people's brokerage accounts to trade shares for themselves - spotted by the regulator since the CSRC started to come down on them in 2007.

Front-running is a widely used strategy for rogue managers, who secretly buy up thousands of stocks before using their multibillion-yuan funds to buy the same shares. When the fund starts to build up its position in the stock, the price is normally driven up, which is when the manager cashes out and makes a killing.