Home appliance tycoon Huang Guangyu [File photo]

Two Chinese investors on Thursday lost a lawsuit in which they sought compensation from jailed home appliance tycoon Huang Guangyu over insider trading.

The Beijing No. 2 Intermediate People's Court rejected the compensation claims filed by two investors, surnamed Li and Wu, saying their claims lacked factual basis and legal ground.

In a court hearing in November, the two demanded compensation totaling 6.8 million yuan (1.1 million U.S. dollars) to cover investment losses they said were caused by Huang's insider trading schemes.

However, the court said the losses were not incurred during the months in 2007 when Huang conducted insider trading and were a result of the general sharp market decline in 2008 in the wake of the worst global financial crisis in decades.

Li alleged that his losses occurred as the crackdown on Huang's insider trading foiled a planned fund injection into a company in which he had purchased shares.

The court ruled that the share price declines were a result of changes in the company's operations, not insider trading.

There is no law concerning civil lawsuits over insider trading in China at present.

Yi Shenghua, a senior partner with Beijing's Yingke Law Firm, suggested that China roll out a law concerning civil lawsuits over insider trading to better crack down on insider trading.

Huang, former chairman of Chinese electronics retail giant Gome, was sentenced to 14 years in prison in 2010 for illegal business dealings, insider trading and corporate bribery.

Huang was also fined 600 million yuan (93.9 million U.S. dollars) and ordered to forfeit 200 million yuan in assets.

Huang was once the richest man on the Chinese mainland and the former legal representative of both Gome and Beijing Pengrun Real Estate Development Company.

As the major shareholder of Beijing Centergate Technologies, Huang was found guilty of insider trading of the company's stocks, with a total value of more than 1.415 billion yuan, from April to September 2007.

Those dealings earned him more than 309 million yuan in trading profits.

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