U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23270 / May 28, 2015
Securities and Exchange Commission v. Luis Chang and Everbright Development Overseas, Limited, Civil Action No. 14 4132 (ER) (S.D.N.Y. )
SEC Settles Pending Civil Action Against Luis Chang and Everbright Development Overseas, Limited
The Securities and Exchange Commission announced today that Luis Chang and Everbright Development Overseas, Limited, a British Virgin Islands company controlled by Chang, have agreed to settle the SEC’s pending civil action against them. The U.S. District Court for the Southern District of New York entered a final judgment in the matter on May 15, 2015 ordering Chang and Everbright to pay a total of $5.88 million in disgorgement, prejudgment interest, and civil penalties and enjoining them from violating federal securities laws.
The SEC’s amended complaint, filed July 24, 2014, alleged that Chang, claiming to be the agent of a Chinese mining company, caused a self-described investment banker to send a letter to U.S. mining company Allied Nevada Gold Corporation’s management proposing to make a cash tender offer. The next morning, Chang used the investment banker to issue a press release announcing that the Chinese mining company had “commenced” a cash tender offer for Allied Nevada. Allied Nevada’s stock price and trading volume immediately surged in reaction to the press release, the contents of which had no basis in fact. The complaint further alleged that unbeknownst to Allied Nevada and the investing public, Defendant Chang, while driving the purported tender offer, had bought over 5% of the Allied Nevada stock through Defendant Everbright, and later sold the position into a falsely inflated market for illicit profits.
Chang and Everbright settled the SEC’s charges, without admitting or denying the allegations in the amended complaint, and consented to the entry of a district court judgment that permanently enjoins them from violating Securities Act Sections 17(a), Exchange Act Section 10(b) and Rule 10b-5(a) and (c), and Exchange Act Section 13(d)(1) and Rule 13d-1. Chang is further enjoined from violating Exchange Act Rule 10b-5(b) and Exchange Act Section 14(e) and Rule 14e-8. The judgment also orders Chang and Everbright to pay disgorgement of $2,890,507, together with prejudgment interest of $94,569, and Chang is further ordered to pay a civil penalty of $2,890,507.
For further information, see Litigation Release No. 23020 (June 12, 2014).