The Los Angeles Times has reported that a U.S. probe alleging insider trading by former Dow Jones & Co. director David Li and two other Hong Kong residents was settled for $24 million.
According to the Securities and Exchange Commission (SEC), in April 2007, Li conveyed material nonpublic information to his close friend Michael Leung the day after learning of the proposed takeover of Dow Jones by News Corp. Leung, assisted by his daughter and son-in-law, purchased $15 million in Dow Jones stock before the offer became public. Shares of Dow Jones surged 55% when News Corp. publicly unveiled the bid on May 1.
Leung’s son-in-law Kan King Wong reportedly gained an additional $40,000 by buying News Corp shares in a TD Ameritrade Holding Corp account.
Leung agreed to pay $16.2 million in fines and restitution. The settlement does not prohibit Leung from serving as an officer or director at a U.S. company, a sanction often imposed in insider trading cases. Wong agreed to forfeit the $40,000 profit and pay a $40,000 fine. Leung’s daughter Charlotte, who is married to Wong, was also a defendant in the case. Although she was not fined, she agreed to refrain from securities law violations.
The case demonstrates the SEC’s commitment to worldwide enforcement of U.S. laws prohibiting insider trading. According to SEC Chairman, Christopher Cox, “…the SEC will move fast, and decisively, not only in the United States but around the world to protect investors.”