A star Chinese stock trader who was arrested after a market collapse in 2015 was sentenced today to five-and-a-half years in prison on charges of manipulating prices and insider trading.
Xu Xiang was one of a series of brokers and others in the securities industry who were detained after share prices plunged. That prompted suggestions the ruling Communist Party was trying to deflect blame for the rout that wiped out some USD 5 trillion in stock value.
Xu and two co-defendants were sentenced by a court in the eastern city of Qingdao after pleading guilty at the start of their trial in December. A court statement at that time indicated the charges were based on activity that began before the 2015 market boom.
Co-defendant Wang Wei was sentenced to three years and Zhu Yong received a two-year term with a three-year reprieve. The court said on its microblog account the three also were fined but gave no amounts.
The three were accused of conspiring with executives of 13 companies from 2010 to 2015 to inflate share prices through large purchases and favorable public statements, the court said. It said the executives' cases were being handled separately.
They faced a maximum of up to 10 years in prison. Xu's sentence of five years was unusually light by the standards of a Chinese system in which some defendants have been sentenced to death for financial offenses.
Xu, the founder and general manager of Zexi Investment in Shanghai, was a celebrity in the Chinese business press, which dubbed him "Brother No. 1 of Private Placement."
Zexi's value increased 218 per cent during the first three quarters of 2015, far ahead of the second-place competitor, which rose 94 per cent, according to Caixin, a business magazine.
The Qingdao court said today that the defendants "severely undermined" the stock market's healthy functioning.
Earlier news reports said Xu and his co-conspirators were accused of making several billion yuan (several hundred million dollars) in profit.
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