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11-201AD ASIC obtains passport and freezing orders against Hanlong Mining executives and others

Tuesday 13 September 2011


The Supreme Court of NSW yesterday made interim orders preventing Mr Steven Hui Xiao, the managing director of Hanlong Mining, from leaving Australia until 22 September 2011, other than to visit Hong Kong between 13 and 14 September 2011 to attend to visa requirements.

ASIC obtained these orders in connection with its investigation into suspected insider trading activities in relation to Bannerman Resources Ltd and Sundance Resources.

ASIC obtained ex parte orders on Monday 5 September 2011 freezing the assets and restraining the travel of Mr Xiao, Mr Calvin Zhu, a Hanlong vice president and Mr Fan Zhang, a Hanlong employee.

Freezing orders were also obtained for Mr Xiao’s wife, Ms Xike Hu, Ms FanFan Chen and Wingatta Pty Ltd, an entity associated with Mr Zhang.

On Friday 9 September 2011 these orders were continued by consent until Thursday 22 September 2011 for Mr Zhu, Mr Zhang, Ms Hu and Ms Chen, with the Court making freezing orders for Wingatta Pty Ltd, as the company was unrepresented.

Although, Mr Xiao consented to the freezing orders he sought to vary the travel restraint orders permitting him to make a brief trip to Hong Kong. ASIC opposed this variation at a hearing on Friday 9 September 2011.

The Supreme Court of NSW also varied the travel restraint orders to allow Mr Xiao to visit Hong Kong. The Court found that ASIC had shown a solid basis for investigating whether Mr Xiao may have contravened the Corporations Act insider trading provisions. However, having regard to Mr Xiao’s connections to Australia, his undertaking given to the Court to return to Australia by 14 September 2011, and an undertaking from Mr Xiao’s wife to hand in her passport until Mr Xiao returns to Australia, the Court allowed the variation.

ASIC’s investigation is at an early stage and ASIC does not propose to comment further at this time as to the status of its investigation.

Editor's note 1:
At a directions hearing in the Supreme Court of News South Wales on Thursday, 22 September, 2011
Editor's note 2:
At a directions hearing in the Supreme Court of News South Wales on Thursday, 17 November, 2011:
Editor's note 3:
At a directions hearing in the Supreme Court of NSW on 19 March 2012 the following orders were made by consent and without admission:

1. Extending asset preservation and travel restraint orders in relation to the Second Defendant, Mr Zhu, until 17 September 2012.
2. Extending asset preservation and travel restraint orders in relation to the Fifth Defendant, Ms Hu, until 16 April 2012 and
3. Extending asset preservation orders in relation to certain trading accounts in the name of the Sixth Defendant, Ms Chen, until 17 September 2012.

The Court also made the following orders:
1. Extending the asset preservation orders in relation to the Fourth Defendant, Wingatta Pty Ltd until 17 September 2012 and
2. The asset preservation orders in relation to the First Defendant, Mr Xiao, were extended until 17 September 2012.

The following further orders were also made:

1. An order restraining the First Defendant, Mr Xiao, should he return to Australia, from leaving or attempting to Australia until further order.

Please note that by consent all orders against the Third Defendant, Mr Fan Zhang were discharged on 21 February 2012.

Editor's note 4:
On 7 September 2012 Mr Zhu appeared in the Supreme Court of NSW. On this occasion a hearing on sentence was set down for 23 November 2012.


Editor's Note 5:
At a directions hearing in the Supreme Court of NSW on 17 September 2012:

- Asset preservation orders in relation to Calvin Zhu, Wingatta Pty Ltd and Ms Fanfan Chen were extended until October 8, 2012

- The travel restraints orders in relation to Calvin Zhu were discharged as he is subject to bail conditions in relation to the criminal proceedings and has already surrendered his passport.

Editor's Note 6:
At a directions hearing in the Supreme Court of NSW on 8 October 2012:

- Consent orders were made which discharged the orders made on 17 September 2012 (the asset preservation orders) in respect of Calvin Zhu, Wingatta Pty Ltd and Ms Fanfan Chen and also dismissed the proceedings against them with each party to pay its own costs.

These proceedings were dismissed as Mr Zhu is now facing criminal charges in which he has surrendered his passport and is subject to bail conditions.

Two weeks ago Mr Zhu paid Pecuniary Penalty Order to Commonwealth of $371,000 , which was the sum of proceeds from his offences.

Editor's Note 7:
The proceedings in relation to Mr Xiao and his wife, Ms Hu return to court for directions on 29 January 2013.

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