CFD trader sent to prison in Australia for insider trading

Contracts for Difference (CFD) trader at PanAust Limited, Jin Xi Li, has been sentenced to nine months in prison for insider trading, the Australia Australian Securities and Investments Commission (ASIC) announced on Monday.

According to ASIC, Li was in possession of inside information in connection with a takeover bid for PanAust by Guangdong Rising H.K (Holding) Limited (GRAM).

GRAM made an initial takeover bid for PanAust in April 2014 which did not lead to anything. Less than a year later, Li reached out to a contact in China to help me determine whether GRAM would make another offer to acquire PanAust. Li’s contact confirmed that GRAM is preparing the finance for another takeover bid.


ASIC ban

Prior to the official announcement by PanAust of the takeover bid on 30 March 2015, Li acquired 390,000 PanAust CFDs during the period between 19 and 26 March 2015. He also made his wife acquire 265,000 PanAust CFDs between 22 and 26 March 2015.

In sentencing, Judge Rinaudo said:

[He] took an unfair advantage when trading, and having regard to the principles of general and specific deterrence, a term of imprisonment is the appropriate sentence.

Li made a profit of $343,000 as a result of the insider trading.

ASIC Deputy Chair Sarah Court said:

This outcome demonstrates the criminal consequences that come from using inside information to trade on Australia’s financial markets. Investigating and pursuing insider trading is an enduring priority for ASIC to ensure our markets are strong and fair.

Earlier in May, ASIC announced it has taken Australia and New Zealand Banking Group Ltd (ANZ) to court for alleged misconduct.

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