Rat trading trial concludes in Shanghai

The trial over a major rat trading scandal ended in Shanghai on Tuesday, with the sentence for Li Xuli, a former private equity star, to be announced later, Shanghai-based cnstock.com, under the Shanghai Securities News, reported.

Li, former chief investment officer of Bank of Communications Schroder Fund Management Co Ltd, was accused of engaging in rat trading.

An investigation by the China Securities Regulatory Commission found Li illegally used inside information to make a profit as high as over 10 million yuan ($1.5 million), from February 2009 to May 2009.

Li denied the charges in court on Tuesday, arguing that he was only giving advice to his wife about buying certain stocks, based on expertise, rather than inside information, the Shanghai-based Xinmin Evening News reported.

Li faces up to 10 years in prison, local media reported earlier.

China's top court is expected to release new judicial interpretations this year to help define criminal conduct involving market manipulation and illegal trading using insider information in the securities market.

China's securities market has long been plagued by manipulation and "rat trading", as some brokers and high-level managers of financial institutions use inside information to reap illicit gains and affect share prices.