A trial has begun in the southern city of Guangzhou with Dong Zhengqing, former President of China's sixth-largest brokerage, facing charges of insider trading.
Dong is accused of tipping off the Guangfa Securities' reverse-merger
listing on the Shenzhen Stock Exchange to his younger brother Dong
Dewei and former classmate Zhao Shuya, who are also being tried in the
case at Tianhe District Court in Guangzhou. The three defendants deny the charges.
The Guangfa Securities brokerage went public on the reverse merger of
Yan Bian Road, a Shenzhen-listed stock, on 2 June 2006. According to
state media, the "market speculation on the Guangfa Securities'
back-door listing drove up the Yan Bian Road stock." The share price rose from RMB2.86 to RMB8.06 overnight that day.
The Guangdong provincial government launched an investigation on Dong
of the "back-door listing" in June 2007. Dong was arrested by police one month later.
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