HONG KONG-A Hong Kong court on Thursday ordered a former Morgan Stanley banker who was jailed for insider dealing to pay civil compensation of about $3 million to nearly 300 investors.
Du Jun, a former managing director at Morgan Stanley in Hong Kong, is serving a six-year jail term after he was convicted in a landmark case in 2009 of 10 counts of insider dealing in the shares of Citic Resources Holdings, a state-owned Chinese oil and coal producer.
Mr. Du’s case is Hong Kong’s biggest insider trading conviction since the behavior was criminalized in 2003. He was found to have bought more than $10 million worth of shares in Citic Resources from February to April 2007, when he was part of a team of Morgan Stanley bankers that was advising the company on a major purchase of oil field assets.
In the criminal case, Mr. Du was originally sentenced to seven years in prison and fined 23.3 million Hong Kong dollars, or $3 million at the current exchange rate. An appeals court in September 2012 reduced the jail term to six years and lowered the fine to 1.7 million dollars, or $219,000.
The new order against Mr. Du came in response to a separate civil action that had been filed by Hong Kong’s Securities and Futures Commission, but which had been delayed while the criminal case and appeal made their way through the courts.
In a ruling in Hong Kong’s Court of First Instance, Justice Peter Ng on Thursday ordered Mr. Du to pay compensation of 23.9 million dollars, or $3.1 million, to 297 investors. The payment is restoration for the investors from whom Mr. Du originally acquired his shares in Citic Resources.
‘‘The 297 investors had no means to detect they were dealing with Du, who was engaged in illegal insider dealing,’’ Mark R. Steward, executive director of enforcement at the securities commission, said in a statement. ‘‘If they had known, they would not have sold their shares to him and certainly not at the same price.’’
‘‘Above all, this case sends a clear message that the consequences of wrongdoing, including the costs of restoration or remediation, should be met by wrongdoers and not be borne by innocent investors or the market,’’ Mr. Steward said.
Mr. Du’s lawyers at the firm Chong & Partners could not immediately be reached for comment.
Although a civil offense, insider trading was considerably more common in Hong Kong before new legislation that took effect in 2003 criminalized the practice, and securities laws in the territory have become increasingly stringent since.
Last year, the securities regulator proposed making investment banks criminally liable for the accuracy of the information in listing documents published by companies they are helping bring to market. Those measures sparked fears the regulator was on a mission to put bankers in jail, which the S.F.C. denied was the case.
