ASIC homes in on CFD fraud as trader appears in court


A 31-year old Sydney man today appeared before court charged with eight counts of insider trading, following an investigation by the Australian Securities and Investments Commission (ASIC).

ASIC alleges Mr Fei Yu procured the acquisition of securities and aided and abetted the acquisition of contracts for difference (CFDs) in Veda Advantage Limited (Veda) in January 2007 while he possessed inside information about a proposed takeover of Veda by Pacific Equity Partners (PEP).

Mr Yu allegedly received the information from close friend, Mr Bo Shi Zhu, who was an executive in the corporate finance advisory division of Caliburn Partnership Pty Ltd (now Greenhill & Co, Inc) who were advising Veda regarding the proposed takeover.

Mr Yu allegedly made more than $20,000 from the trades.

Appearing before Sydney’s Downing Centre Local Court, Mr Yu was not required to enter a plea and the matter was adjourned to 7 October 2014.

The Commonwealth Director of Public Prosecutions is prosecuting the matter.

Background

The alleged insider trading was identified by ASIC’s market surveillance team and referred to ASIC’s markets enforcement team for investigation and enforcement action.

The maximum penalties associated with the alleged offences at the time they were committed range from 5 years jail and/or a fine of $220,000. For offences committed on or after 13 December 2010 the penalties increased to a maximum penalty for individuals of 10 years jail or a fine of $495,000, or both.

ASIC’s enforcement reports during the last two years have demonstrated that the Antipodean regulatory authority has made a determined effort to eradicate the practice of insider trading, obtaining thirteen convictions since 2013, and also that the investment in surveillance systems is bearing fruit.

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ASIC homes in on CFD fraud as trader appears in court

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