Former Morgan Stanley MD, Du Jun, who was jailed for insider dealing and received the heaviest criminal sentence handed out in Hong Kong has been banned from reentering the industry for life.
It is interesting to note that when he was originally sentenced reports in the media at the time stated that Judge Andrew Chan, was highly critical of Du's former employer, Morgan Stanley. A part of Du's defence was that he had sought approval from the Morgan Stanley compliance department for the trades in question.
The prosecutor in the case was Ms Charlotte Draycott. She is reported in the media as follows:
"Draycott said Du received approval only because the bank's compliance system was run in a "haphazard and ineffective manner".
The SFC has worked hard at taking strong action against Mr Du but as far as we are aware there has been no public comment about whether there were any issues that arose at Morgan Stanley. It should be remembered that this employee, according to the judgement issued by the District Court, purchased on nine occasions a total of HK87m (some US11.15m) in shares in a company that Morgan Stanley was giving corporate finance advice to. A portion of those purchases were, reportedly, financed by Morgan Stanley. Given the comments of the trial judge that were reported at the time, this seems a curious footnote that remains outstanding.
We are not in any way condoning Mr Du's actions. All the public materials suggest he deserved imprisonment. Why has the Commission not addressed in a public way the concerns of the trial judge and the statements made by prosecuting counsel?
The full SFC release regarding Mr Du's recent ban is set out below:
SFC bans Du Jun for life
4 Mar 2013
The Securities and Futures Commission (SFC) has banned Mr Du Jun, former managing director of Morgan Stanley Asia Limited (Morgan Stanley), from re-entering the industry for life (Note 1).
The disciplinary action follows the completion of the criminal proceedings commenced by the SFC against Du for insider dealing in the shares of CITIC Resources Holdings Limited (Notes 2 & 3).
The SFC concluded that Du is not a fit and proper person to be licensed. In deciding the sanction, the SFC took into account all relevant considerations including:
- Du breached the trust and confidence placed in him by his clients and employer;
- Du’s criminal conviction and the direct relevance of the wrongdoings to his fitness and properness to be a licensed person; and
- insider dealing is a very serious misconduct which damages market integrity, a strong deterrent message must be sent to the market to deter other practitioners from committing
- Du Jun was licensed under the Securities and Futures Ordinance (SFO) to carry on Type 1 (dealing in securities) regulated activities and was accredited with Morgan Stanley from 12 February 2004 to 5 June 2007. Du currently holds no licence with the SFC.
- Please see the Court of Appeal judgment for Appeal dated 20 September 2012 which is available on the judiciary website and the SFC’s press releases dated 20 September 2012 and 2 January 2013.
- The SFC’s proceedings against Du Jun under section 213 of the SFO are ongoing.