(Yicai Global) Aug. 12 -- Sun Qiusheng, chairman of Shanghai Shuangling Elevator Engineering, has been penalized CNY1.96 million (USD281,535) in an aggregate fine and forfeiture for insider trading in a case which is an outgrowth of child molestation charges against Seazen Holdings ex-Chairman Wang Zhenhua.

Sun and Wang have known one other for over ten years, according to an investigation by the China Securities Regulatory Commission, which issued the corresponding penalty notice yesterday. After learning Wang was the subject of a police probe for suspected child molestation, Sun almost immediately sold his shares in Shanghai-based property developer and operator Seazen Holdings.

The police detained Wang on suspicion of molesting an underage girl in July last year. The case went to trial in mid-July and a Shanghai court handed Wang a five-year sentence in a judgment from which he has appealed.

The abusive incident involving Wang took place in a five-star hotel in Shanghai on June 29 last year, and the girl’s parents immediately alerted police. Wang met with Sun at his office in Seazen Holdings on July 1 to discuss the incident.

Sun then sold 50,000 Seazen shares on July 2 and 3 using his wife’s trading account, thereby averting CNY654,300 (USD94,023) in losses, the CSRC investigation found.

Sun and his wife did not trade any Seazen shares from May 15 to July 1 last year, their securities accounts show. The time when Sun cashed in his shares coincided with his learning of the inside information at the time it became forthcoming. His motivation for selling Seazen shares during the period was thus manifestly obvious.

Based on this, the CSRC confiscated CNY654,300 of Sun’s illicitly-avoided losses and slammed him with a CNY1,308,700 penalty.

Editor: Ben Armour