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As a result of an ASIC investigation, Hui Xiao, also known as Steven Xiao and Jiayi Xiao, the former Hanlong Mining Investment Pty Ltd (Hanlong Mining) managing director, today appeared before court charged with 104 counts of insider trading, following his surrender to Australia.
The charges relate to suspected insider trading in financial products related to Sundance Resources Limited and Bannerman Resources Limited in July 2011, while Mr Xiao was Hanlong Mining managing director.
Within ASIC’s periodical enforcement reports, the Australian regulatory authority clearly emphasized that it intends to focus strongly on eradicating the practice of insider trading within its financial markets, and this case shows that the Australian government is prepared to go to other countries to retrieve transgressors in order that they face trial in Australia.
Each offence carries a maximum penalty of 10 years jail.
ASIC alleges that between 1 and 8 July 2011, while in possession of inside information relating to a proposed takeover by Hanlong Mining of Bannerman Resources Limited (Bannerman), Mr Xiao procured his wife, Xike Hu (Ms Hu), Gold Pattern International Limited (a company incorporated in the British Virgin Islands) and Wingatta Pty Ltd (Wingatta) (a company incorporated in Australia) to acquire Bannerman contracts for difference (CFDs) and shares.
ASIC also alleges between 13 and 15 July 2011, while in possession of inside information relating to a proposed takeover by Hanlong Mining of Sundance Resources Limited (Sundance), Mr Xiao procured Ms Hu, Market Star Limited (a company incorporated in the British Virgin Islands) and Wingatta to acquire Sundance CFDs.
Appearing before Central Local Court, Mr Xiao was not required to enter a plea and the matter was adjourned to 26 November 2014.
Upon arrest, Mr Xiao was refused bail by the police. No application for bail was made in court today and Mr Xiao was remanded in custody.
The Commonwealth Director of Public Prosecutions is prosecuting the matter.
On 17 November 2011, the Supreme Court of NSW made a variation to court orders obtained by ASIC that permitted Mr Xiao to travel to China and return back to Australia on 26 November 2011. Following his departure from Australia on 21 November 2011, Mr Xiao failed to return to Australia in accordance with that court order.
Following Mr Xiao’s failure to return to Australia, the Australian Government (on behalf of ASIC) presented a request for Mr Xiao’s surrender to Hong Kong in November 2013. On 12 January 2014, Mr Xiao was arrested in Hong Kong and, on 17 September 2014, Hong Kong issued an order for the surrender of Mr Xiao to Australia.
Mr Xiao arrived in Australia at 7am today, escorted by officers from the Australian Federal Police (AFP).
ASIC worked with the Commonwealth Attorney-General’s Department, the Commonwealth Director of Public Prosecutions, the AFP, the Hong Kong Department of Justice and the Hong Kong Police in securing Mr Xiao’s surrender to Australia.
On 15 February 2013, Bo Shi Zhu, the former Hanlong Mining vice-president, was convicted and sentenced to two-years-and-three months jail, to serve a minimum term of 15 months, as part of ASIC’s investigation.
Following an ASIC referrals to the CDPP and the AFP’s Criminal Assets Confiscation Taskforce, $586,000 has been restrained and $792,000 has been forfeited under the Proceeds of Crime Act 2002 from persons and entities associated with ASIC’s investigation.
For the full report from ASIC, click here.