Wang Bocheng, a 44-year-old Beijing steel trader, has learned the hard way about the pitfalls of playing China's immature stock market as well as the importance of attending to details.

After investing 5.1 million yuan ( $753,323) in April 2007 and entrusting his broker with his password to make trades without consulting him, Wang lost about 4 million yuan ($590,841) in less than 10 months.

But Wang only discovered the loss a year later when he thought to check his transaction records himself. Among his findings: one transaction for 5,000 shares of Luoniushan, a failing agribusiness firm marked in 2007 as "special treatment" by the Shenzhen Stock Exchange as a high-risk investment.

It was one of five secret trades made on June 7, 2007 without his consent and while he was aboard an airplane on a business trip.

After discovering his losses and investigating further, Wang and his lawyer, Xiao Yuancheng, found that all the orders had come from the same Internet protocol (IP) address: 218.97.242.172. The IP address provider was Beijing Sinnet Technology (BST).

They filed suit against Wang's securities firm, BOC International (China) Ltd (BOCI) in Xuanwu District People's Court, which had jurisdiction over BOCI's office in Beijing.

It was the beginning of a two-year court fight that Wang ultimately lost, along with his money.

A judicial investigation found that the IP address had "been closed or out of service since July 24, 2006, and it was not the IP address of BOCI," BST operation director Li Chao testified on February 18, 2009.

But, interestingly, "BOCI's office on Xuanwu Avenue (where Wang did his trading) used our Internet connection service before February 18, 2008," Li added. That indicates that BOCI's IP address - even if "dead" - could have been among the pool of addresses used.

"An Internet service provider might temporarily assign an IP address to a requesting dynamic host configuration protocol computer from a pool of IP addresses in times of limited IP resources at rush hour," said Zhou Wenzhe, information security analyst with CCID Consulting.

BOCI 'not responsible'

But the Xuanwu District People's Court ruled in November 2009 that BOCI was not responsible for the losses because Wang failed to prove that BOCI had anything to do with the secret trading in his account.

"The unexpected stock trading during Wang's business trip could only prove that he disclosed or left his account number and password to someone else, which is unrelated to this case," the verdict stated.

Wang said even his family didn't know his account details but admitted he shared his account number and password with his broker Zhang Jie. He appealed the decision to Beijing First Intermediate People's Court.

BOCI was established in 2002 by the investment arm of Bank of China (BOC) and five other large State-owned enterprises including PetroChina.

Impressed with BOC's backing and bank service, Wang met Zhang at the recommendation of his banker at the BOC outlet that he used in early 2007.

"I trusted the BOC because its name is related to the Bank of China, which has a great reputation," Wang told the Global Times.

The stock market was on its way to its ultimate peak in October 2007 when the pair met. The Shanghai Stock Exchange composite index had soared about 45 percent within four months since early 2007.

In this bullish market, individuals and bank depositors were drawn like ants to honey, hoping to gain high returns quickly. Brokers such as Zhang were plentiful and hanging around banks where bankers were willing to help introduce high net-worth value individuals, such as Wang, to them.

"You didn't look for customers because they lined up asking us to open stock accounts for them," Ji Yuying, a stockbroker of BOCI, recalled of that boom.

"It was very easy to earn commission as high as 20,000 yuan ($2,954) per month then," she said.

Wang said that he had never personally traded stocks though he previously had a stock account with another brokerage that his family members traded under his name.

Out of trust and lured by high returns as Zhang described, Wang decided to give it a try and transferred his account into BOCI with Zhang as his broker in April 2007.

"I trusted her and BOCI and didn't pay attention all the time to my account trading details," Wang said.

"Because I knew almost nothing about stocks" at the beginning, Wang said he gave his account password to Zhang.

At first, Zhang recommended stocks and discussed with him before trading for him, Wang said.

"I occasionally traded for myself later, but only in areas I knew," he said. He said he preferred to buy IPO shares rather than buying from the secondary market where the share prices were often much higher than IPOs.

2 million yuan in losses

After a month long correction in June and July, the stock market index climbed without stopping until it reached a high of 6,100 points in mid-October, 2007 and then plunged later. In early November Wang bought 3,000 PetroChina IPO shares for 16.7 yuan ($2.47). But when the market opened for PetroChina on November 5, he said Zhang "sold my other stocks without notice, even at a loss, in order to have money available to buy more shares of PetroChina." By then, PetroChina's prices had climbed as high as 48.6 yuan ($7.18).

He said Zhang bought 54,000 shares of PetroChina for him in five lots at prices from 43 yuan ($6.35) to 48 yuan ($7.09) on the same day.

PetroChina's share price has never risen about its IPO price since then, lingering barely above 10 yuan ($1.48) currently. The PetroChina share trading alone cost him 2 million yuan ($295,421) in losses, Wang said. After trading through BOCI for 10 months, however, Wang contributed to a commission of 84,000 yuan ($12,407) and 140,000 yuan ($20,679) in stamp duty, he said.

Zhang left the company before March 2009 and attempts to reach her by the Global Times were unsuccessful. The mobile phone number on her old business card is no longer in use.

However, in written testimony given to a court investigator who came to her home on March 11, 2009, Zhang said, "I didn't trade for him. BOCI had strict rules."

She declined to appear in court personally citing a "poor physical condition." And Regulations on the Management of Stock Brokers only came into effect beginning April 13, 2009, clearly stating that stock brokers are prohibited to trade for their clients.

Similar cases abound

"I have seen many cases like this," said Yang Zhaoquan, partner at Beijing Huatang Law Firm.

"Individual investors in most of the cases failed with a lawsuit because they had difficulty proving that it was the broker and not someone else involved in the stock trading."

On April 20 this year, Beijing First Intermediate People's Court dismissed Wang's appeal, stating that Wang still lacked adequate evidence that it was BOCI's fault that he lost his money.

"My lawyer and I will continue with legal procedures," Wang said, though he added that the case is no longer center of his life. What he cares most about now is working hard to make the money back.

Wang hadn't changed his password or closed his account because he said he believed he could further complicate the case by doing so.

His remaining stocks plunged substantially and with no hope that they will rebound to 2007 levels. "I can do nothing but leave (the stocks) to my grandchildren," he said.

He added that he has learned some hard lessons about investing. "Never trust the brand of a securities company, no matter how good it looks," he said.