The U.S. Securities and Exchange Commission (SEC) has obtained an emergency court order to freeze the assets of overseas traders that may have generated illegal trading profits ahead of the announced $15 billion takeover of Canada’s Nexen Inc. this week.
The SEC said Friday that it has frozen trading accounts in Hong Kong and Singapore that it believes were used to reap more than $13 million in illegal profits by trading in advance of this week’s public announcement that China-based CNOOC Ltd. agreed to acquire Nexen.
The SEC alleges that Hong Kong-based firm, Well Advantage Limited, and other unknown traders, stockpiled shares of Nexen based on confidential information about the deal in the days leading up to the announcement. It notes that Well Advantage is controlled by prominent Hong Kong businessman, Zhang Zhi Rong, who also controls another company that has a “strategic cooperation agreement” with CNOOC.
The allegations have not been proven, and the SEC says its investigation is continuing. The emergency court order obtained by the SEC freezes the traders’ assets valued at more than $38 million, and prohibits the traders from destroying any evidence. In addition to the emergency relief, the commission is seeking a final judgment ordering the traders to disgorge their ill-gotten gains with interest, pay financial penalties, and permanently bar them from future violations.
“Well Advantage and these other traders engaged in an all-too-familiar pattern of misusing inside information to place extremely timely trades and profit handsomely from their illegal acts,” said Sanjay Wadhwa, deputy chief of the SEC enforcement division’s market abuse unit. “Despite the challenges of investigating misconduct in the U.S. by trading accounts located overseas, we have moved swiftly to freeze the assets of these suspicious traders and will hold them accountable for their actions.”Connected to Microsoft Exchange