A Sydney-based resident, Fei Yu, has pleaded guilty to a charge of insider trading and has formally admitted a second insider trading offence, as per a statement issued today by the Australian Securities and Investments Commission (ASIC).
Yu has been released on bail subject to good behaviour for 12 months and is required to pay a penalty totalling $10,000. In addition, Yu will pay the net profits from his offence, totalling $17,527, to a charitable foundation. He will also be automatically disqualified from managing a corporation for 5 years.
Yu admitted procuring the acquisition of shares and contracts for difference (CFDs) in Veda Advantage Ltd in January 2007 while possessing inside information about a proposed takeover of Veda by Pacific Equity Partners. The accounts used to acquire the shares and CFDs were held in the name of Yu’s mother and an associate.
Yu received the inside information from friend, Bo Shi Zhu, who was an executive in the corporate finance advisory division of Caliburn Partnership Pty Ltd who advised Veda regarding the proposed takeover.
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Overall, Yu invested $34,795 in Veda shares and CFDs and made a gross profit of $20,567 from the trades.
ASIC Commissioner Cathie Armour commented: “ASIC is focused on deterring insider trading conduct wherever it occurs. Every prosecution is another important step in promoting confidence in the integrity of Australia’s financial markets.”
Yu first appeared in court on 12 August 2014 initially charged with eight individual counts of insider trading, following an ASIC investigation.
The maximum penalty for the alleged offence at the time it was committed was 5 years jail and a possible fine of $220,000. For offences committed on or after 13 December 2010, the maximum penalty increased to 10 years jail or a fine of $495,000, or both.
Bo Shi Zhu Zhu was also convicted of insider trading on February 2013 relating to Yu, plus additional offences, and sentenced to imprisonment for 2 years and 3 months.