A Chinese investor today substantially raised his compensation claim against jailed home appliance tycoon Huang Guangyu and his wife Du Juan over insider trading.
Li Yan had demanded compensation of 155 yuan ($24.3) in the civil lawsuit case heard Tuesday at the Beijing No. 2 Intermediate People’s Court.
Li had said he lost 155 yuan after selling 500 shares on June 15, 2007 as a result of the insider trading.
In the court hearing on Tuesday morning, Li’s lawyer, Zhang Yuanzhong, said his client raised the claim to around 800,000 yuan to cover stock trading losses and related commission fees, stamp duties and interest earnings during further trade in 2007 and 2008.
If the court rejects the hiked compensation claim, new separate lawsuits will be filed later, Zhang said.
This is the first civil suit filed against Huang over insider trading and many more investors could follow if Li wins the lawsuit and receives compensation.
Li said he purchased more than 50,000 shares of Shenzhen-listed Beijing Centergate Technologies at 14 yuan per share before the shares trading was suspended in September 2007 pending restructuring announcement. He later bought an additional 37,000 shares at 16 yuan after the restructuring plan was announced in May 2008.
Li said he sold all the shares at over 4 yuan per piece months later when the company announced the restructuring plan failed, resulting in the huge losses.
“The early active trading was actually a result of the insider trading, but the illusion then made me believe the restructuring was very likely and therefore affected my investment decisions,” he said.
Experts said the lawsuit might reach a stalemate due to difficulty in obtaining and confirming evidence, as there is no law concerning civil lawsuits over insider trading in China.
Several questions should be answered in the case as to whether there was an actual restructuring plan, and if there was, what caused it to fail, said Ye Lin, a professor of law at Renmin University.
Huang, former chairman of the Chinese electronics retail giant Gome, was sentenced to 14 years in prison last year for illegal business dealings, insider trading and corporate bribery.
You can tell you can’t trust him right away. Look at those skeevy eyes and joker smile!