A former stock trader was jailed six months on Tuesday for posting false information online about a locally listed IT firm, Datacraft Asia, in 2004.

Justice VK Rajah, in his judgement on Able Wang Ziyi, said that a custodial sentence was called for, taking into account the 'strong public interest militating against mischief in the market through the mass media such as internet.'

Wang, 42, a father of two who now runs a furniture business in Shanghai, was first charged in 2006 with spreading rumour on a popular stockmarket investor forum on Feb 16 2004 that the Commercial Affairs Department (CAD) had raided the offices of Datacraft Asia.

On the day he posted the rumour on shareinvestor.com, he short-sold 111,000 Datacraft shares. Minutes later, he posted on the forum: 'Heard CAD raided Datacraft office last Friday again.'

He then bought back 61,000 shares to cover his short position, without waiting long enough to see the effect of his rumour, The Business Times reported on Wednesday.

Wang had written his post based on an SMS he received earlier from a Samuel Wong, an OCBC Bank institutional buyer.

He was acquitted in November 2006 after the prosecution failed to prove that he did not care that the information posted was true or false.

In November 2007, following an appeal by the prosecution, the judge overturned the acquittal, ruling that stock traders should be responsible for what they post online because they risked being prosecuted if the rumour was proven to be false or unsubstantiated.

Said Justice Rajah in his judgement on Tuesday: 'Ultimately, while Wang's precise motive may remain troublingly dubious, the fact remains that he has been convicted only of making the postings recklessly and not in full knowledge that they were false.'

'That said, the strong public interest militating against mischief in the market through mass media such as the Internet dictates a custodial sentence.'

'While one might theoretically expect sensible investors to be circumspect about information gleaned from a public forum, a market reaction is practically inevitable, and the maker of the false statement must be held responsible for his actions and statements.'

The judge said a fine was not necessary as Wang did not gain from his actions.

'Nevertheless, I cannot dismiss or ignore the fact that the Internet provides a medium for instantaneous and anonymous mass dissemination,' he said, acknowledging that those who commit offences online could escape detection or be hard to identify.

Wang could have been jailed for up to seven years and/or fined $250,000.