ASIC has announced that Sydney man Fei Yu has been convicted by Justice Armitage of the NSW District Court after pleading guilty to one rolled up charge of insider trading and formally admitting a second insider trading offence that was taken into account by the Court.
Mr Yu has been released on recognizance subject to the condition that he be of good behaviour for a period of 12 months and pay a pecuniary penalty in the amount of $10,000. In addition, Mr Yu undertook to pay the net profits from his offending ($17,527) to a charitable foundation and he will also be automatically disqualified from managing a corporation for 5 years.
Mr Yu admitted procuring the acquisition of shares and 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. The accounts used to acquire the shares and CFDs were held in the name of Mr Yu’s mother and an associate.
Mr Yu received the inside information from a 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. Greenhill & Co co-operated with ASIC throughout the investigation.
Overall, Mr Yu invested $34,795 in Veda shares and CFDs and made a gross profit of $20,567 from the trades.
ASIC Commissioner Cathie Armour said:
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.