SEC files insider trading complaint over Nexen deal
Source: Agencies |
July 30, 2012, Monday
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Print Edition
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THE US securities regulator filed a complaint in court last Friday against a Chinese firm and other traders, accusing them of making over US$13 million from insider trading ahead of a bid by China's CNOOC for Canadian oil company Nexen Inc.
The Securities and Exchange Commission said the federal court in Manhattan had frozen assets worth over US$38 million belonging to Hong Kong-based Well Advantage, controlled by businessman Zhang Zhirong, and other unnamed traders who used accounts in Hong Kong and Singapore to trade in Nexen stock.
They made trading profits of US$7 million and US$6 million respectively by using inside knowledge of the merger to buy Nexen shares before the announcement, the SEC says.
The trading was suspicious, the SEC claims in its complaint, because the accounts used to buy the shares had "either no history or extremely limited history" of buying Nexen shares before July 2012.
"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 market abuse unit in the SEC's enforcement division.
CNOOC said on July 23 it had agreed to acquire Nexen for US$15.1 billion, China's biggest foreign takeover bid. Shares of Nexen jumped almost 52 percent that day.
The unnamed Singapore traders used accounts in the names of Phillip Securities and Citibank, while Well Advantage made its trades through accounts held at UBS Securities and Citigroup Global Markets. Neither of the Well Advantage accounts had traded Nexen shares since January 2012, and the Citigroup account had been completely dormant for more than six months.
Zhang also controls China Rongsheng Heavy Industries Group Holdings, which according to a company filing in October 2010, entered a strategic cooperation agreement with CNOOC.
A spokeswoman for CNOOC declined to comment. Calls to Well Advantage's office in Hong Kong were not answered on Saturday.
Hong Kong's Securities and Futures Commission also declined comment while officials at the Monetary Authority of Singapore were not immediately available.
The SEC does not allege any wrongdoing by Zhang, but notes that he is the controlling shareholder of a company that engages in significant business activities with CNOOC.
Zhang was ranked the 22th richest person on Chinaby Forbes Magazine in September 2011.
However, his net worth fell by more than half in the past year to US$2.6 billion in March 2012 as shares of Rongsheng tumbled. The stock ended at HK$1.4 (18 US cents) on Friday against an IPO price of HK$8.0 fixed in November 2010.
The Securities and Exchange Commission said the federal court in Manhattan had frozen assets worth over US$38 million belonging to Hong Kong-based Well Advantage, controlled by businessman Zhang Zhirong, and other unnamed traders who used accounts in Hong Kong and Singapore to trade in Nexen stock.
They made trading profits of US$7 million and US$6 million respectively by using inside knowledge of the merger to buy Nexen shares before the announcement, the SEC says.
The trading was suspicious, the SEC claims in its complaint, because the accounts used to buy the shares had "either no history or extremely limited history" of buying Nexen shares before July 2012.
"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 market abuse unit in the SEC's enforcement division.
CNOOC said on July 23 it had agreed to acquire Nexen for US$15.1 billion, China's biggest foreign takeover bid. Shares of Nexen jumped almost 52 percent that day.
The unnamed Singapore traders used accounts in the names of Phillip Securities and Citibank, while Well Advantage made its trades through accounts held at UBS Securities and Citigroup Global Markets. Neither of the Well Advantage accounts had traded Nexen shares since January 2012, and the Citigroup account had been completely dormant for more than six months.
Zhang also controls China Rongsheng Heavy Industries Group Holdings, which according to a company filing in October 2010, entered a strategic cooperation agreement with CNOOC.
A spokeswoman for CNOOC declined to comment. Calls to Well Advantage's office in Hong Kong were not answered on Saturday.
Hong Kong's Securities and Futures Commission also declined comment while officials at the Monetary Authority of Singapore were not immediately available.
The SEC does not allege any wrongdoing by Zhang, but notes that he is the controlling shareholder of a company that engages in significant business activities with CNOOC.
Zhang was ranked the 22th richest person on Chinaby Forbes Magazine in September 2011.
However, his net worth fell by more than half in the past year to US$2.6 billion in March 2012 as shares of Rongsheng tumbled. The stock ended at HK$1.4 (18 US cents) on Friday against an IPO price of HK$8.0 fixed in November 2010.
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