U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22663 / April 1, 2013
Securities and Exchange Commission v. Well Advantage Limited, et al., Civil Action No. 12-CV-5786 (SDNY)(RJS)
Foreign Traders Agree to Pay $3.3 Million to Settle Charges in Nexen Insider Trading Case
On March 29, 2013, the Securities and Exchange Commission announced that a Chinese businessman and his wife whose trading accounts were frozen last year as part of a major insider trading case have agreed to settle charges that they loaded up on the securities of Nexen Inc. while in possession of nonpublic information about an impending announcement that the company was being acquired by China-based CNOOC Ltd.
The SEC obtained an emergency court order in July 2012 to freeze multiple Hong Kong and Singapore-based trading accounts just days after the Nexen acquisition was announced and suspicious trading in Nexen stock was detected. The SEC's complaint alleged that in the days leading up to the announcement, Hong Kong-based firm Well Advantage Limited and other unknown traders purchased Nexen stock based on confidential details about the acquisition.
The SEC's investigation has identified Ren Feng and his wife Zeng Huiyu as previously unknown traders charged in the complaint as well as Ren's private investment company CT Prime Assets Limited and four of Zeng's brokerage customers on whose behalf she traded. They made a combined $2.3 million in illegal profits from Nexen stock trades made by Ren and Zeng.
The settlement, which is subject to court approval, requires the traders to pay more than $3.3 million combined.
Ren and CT Prime agreed to the entry of a final judgment requiring them to jointly pay disgorgement of their ill-gotten gains of $839,714.57 plus a penalty of $839,714.57, and permanently enjoining them from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Zeng agreed to the entry of a final judgment requiring her to pay disgorgement of her ill-gotten gains of $202,030.22 plus a penalty of $202,030.22, and permanently enjoining her from future violations of Section 10(b) of the Exchange Act and Rule 10b-5.
Zeng also traded on behalf of four of her brokerage customers, who have agreed to disgorgement of the ill-gotten gains. Wong Chi Yu and her company Giant East Investments Limited agreed to jointly pay disgorgement of $641,057.94. Wang Wei agreed to pay disgorgement of $137,369.56. Wang Zhi Hua agreed to pay disgorgement of $466,169.15.
The defendants neither admit nor deny the SEC's allegations. The proposed settlement is subject to the approval of Judge Richard J. Sullivan of the U.S. District Court for the Southern District of New York.
In October 2012, the SEC announced a settlement with Well Advantage, which agreed to pay more than $14.2 million to settle the insider trading charges. U.S. District Court Judge Richard J. Sullivan of the Southern District of New York approved that settlement.