U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20106 / May 8, 2007
SEC v. Kan King Wong and Charlotte Ka On Wong Leung, 07 Civ. 3628 (SAS) (S.D.N.Y. filed May 8, 2007)
Securities and Exchange Commission Obtains Asset Freeze in Connection With Trades in Dow Jones Securities Prior to Acquisition Announcement
Orders Placed From Foreign Accounts Just Prior to Acquisition Announcement; as much as $23 Million Frozen
On May 8, 2007, the United States District Court for the Southern District of New York entered a Temporary Restraining Order freezing assets of two Hong Kong residents, Kan King Wong and Charlotte Ka On Wong Leung, held at a branch office of Merrill Lynch & Co. in Hong Kong. The Commission's complaint alleges that the defendants engaged in illegal insider trading, in violation of the antifraud provisions of the federal securities laws. Among other relief, the court also imposed an expedited discovery schedule and prohibited the destruction of relevant documents.
According to the Commission's complaint, the defendants purchased 415,000 shares of Dow Jones common stock in their Merrill Lynch accounts between April 13 and April 30, 2007, for approximately $15 million. On May 1, 2007, Dow Jones stock price shot up 58% when it was disclosed publicly that News Corporation had made an offer to acquire Dow Jones for $60 per share — a substantial premium over the market price. On May 4, 2007, the defendants sold all 415,000 shares of Dow Jones common stock for a total of approximately $23 million and a profit of approximately $8 million. The Commission alleges that the defendants engaged in insider trading, in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest thereon, and civil monetary penalties.
The Commission's investigation is continuing.