China's stock regulator has reportedly barred two fund managers from entering the country's capital market forever and fined them 1.5 million yuan (US$210,000) each after they were convicted of insider trading.
Tang Jian, a former fund manager at China International Fund Management, and Wang Limin, a former manager at China Southern Fund Management, received the punishments in early February, Caijing magazine reported yesterday.
The stock regulator also confiscated a combined 3 million yuan in illegal profits by the duo, Caijing said. They were the first batch of fund managers punished after the country launched a nationwide campaign to combat insider trading early last year.
Spokesmen for CIFM and China Southern were not available for comment yesterday, and an official at China Securities Regulatory Commission declined to comment.
Tang was accused of front running, also known as "rat trading," which refers to the unethical practice of a broker trading stocks based on insider information before clients have been given the news.
Earlier media reports said that Tang had helped his father and other relatives know about his fund's investment decisions in advance, and let them illegally profit from the information.
Tang's relatives allegedly benefited from buying shares of Shanghai-listed Xinjiang Joinworld Co before the fund that Tang managed bought them.
Details of Wang's insider trading were not available. Tang and Wang were both sacked by their companies last year after the CSRC started to probe their behavior.
The pair are not subject to further criminal charges, Caijing said.
The CSRC in January 2007 ordered mainland fund management firms to strictly oversee the trading accounts of executives and their relatives to weed out irregularities.
The stock regulator in April began an industry-wide program to look into suspected stock manipulation by mutual fund managers and pledged to crack down heavily on insider trading.
"The punishment didn't seem that harsh as the people involved are not subject to criminal charges," said a Shanghai-based senior securities executive, who asked to stay anonymous. "But it may be just a warning. If someone hopes to continue to profit from insider trading, they will face more serious results."
(Shanghai Daily March 5, 2008)