VST holdings prepares for the worst as Court found chairman guilty of price rigging

A replacement for Li Jialin  has already been decided.

On 22 October 2012, the Hong Kong District Court convicted the Chairman of VST, Mr. Li Jialin, on 10 counts of price-rigging and 16 counts of failure to disclose trading of own shares during periods in 2007. Mr. Li pleaded not guilty to 11 counts of price-rigging and guilty for all 16 counts of non-disclosure.

He was released on bail and scheduled to appear in court for sentencing on 31 Oct 2012. To recall, the case involves Mr Li's trades in VST shares during 2007, which amounted to approximately USD2m.

The judge believed that the transactions affected the outcome of: i) the pricing of a subsequent share placement, and ii) VST's share price at the year-end.

OSK-DMG said that the management was disappointed with the outcome but VST Holdings has ontingency plans in place.

Here's more form OSK-DMG:

We have spoken with the CFO on and this matter, and while he refrained from commenting on the technicalities of the case, he said the management team was disappointed with the verdict.

Although management hopes for a lenient sentence, they have already prepared for the worst scenario in which Mr. Li is handed a jail term and is no longer able to perform his duties at VST. They said a replacement for Mr Li has been planned and will come internally, though this will not be officially announced until after Mr. Li's sentencing.

Little fundamental impact seen. There has not been any noticeable impact fromthis incident and management expects this to remain the case, even under the worst case scenario, given VST's: i) strong relationships with its vendors and clients developed over the past decade and ii) well-rounded and experienced management team, which includes board members from its subsidiary, ECS Holdings. (ECS SG, NR). We concur with this view.