US charges six Chinese citizens with insider trading
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Your support makes all the difference.The US government froze the assets of six Chinese citizens and one company charged with trading on confidential information that a China-based pork processor, Zhongpin Inc, was about to go private.
The US Securities and Exchange Commission on Friday said the six people and the company, British Virgin Islands-based Prestige Trade Investment Ltd, made more than $9 million (£5.7m)by trading in the US shares of Zhongpin before it announced a plan to go private.
Zhongpin's Chairman, Xianfu Zhu, said on 27 March he wanted to buy the company for $13.50 (£8.50) a share, which the SEC said was a 46 per cent premium over the previous day's closing price. Zhongpin's stock price jumped 21.8 per cent that day.
"The defendants in this action - all with seemingly limited resources - suddenly and inexplicably purchased more than $20 million in Zhongpin securities just before an important public announcement," said Merri Jo Gillette, director of the SEC's Chicago regional office.
"The SEC's swift action to secure a judicial freeze order prevented millions of dollars from moving offshore."
The SEC said the six defendants and Prestige Trade bought Zhongpin stock between March 14 and March 26, in amounts that were inconsistent with prior trading behavior.
These purchases also made up the bulk of trading in Zhongpin during that time, even though most of the people charged had never traded in the company before.
The SEC said it is also seeking permanent injunctions, the surrender of gains, and financial penalties against Siming Yang, who formed Prestige Trade in March, along with Caiyin Fan, Shui Chong (Eric) Chang, Biao Cang, Jia Wu and Ming Ni.
Reuters
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