Two Hong Kong firms to pay $13.9m to settle SEC insider trading charges

NEW YORK (REUTERS) - Two Hong Kong asset management firms have agreed to pay US$10.9 million (S$13.9 million) to settle charges by the United States (US) Securities and Exchange Commission of insider trading ahead of a bid by China's CNOOC for Canadian oil company Nexen Inc.

The proposed accord, disclosed in a court filing on Monday, would add to the more than US$18 million the US securities regulator had previously secured in settlements as part of an investigation into suspicious trading linked to the July 2012 deal.

China Shenghai Investment Management Limited and eight of its clients including an individual named Stephen Wong have agreed to give up nearly US$4.27 million in profits realized trading in Nexen stock.

CITIC Securities International Investment Management (HK) Ltd, a joint venture between CITIC Securities International Company Ltd and a company owned by China Shenghai's principal, James Wang, has agreed to pay nearly US$6.6 million in disgorged profits and penalties.

The deal requires approval by US District Judge Richard Sullivan in New York.

Lawyers for the corporate defendants did not immediately respond to requests for comment, while a lawyer for Wong declined comment. A spokesman for the SEC declined comment.

CNOOC announced on July 23, 2012, that it agreed to acquire Nexen for US$15.1 billion in what became China's biggest foreign takeover bid. Shares of Nexen climbed almost 52 per cent that day.

Five day later, though, the SEC went to court and obtained a court order seeking to freeze the assets of traders using accounts in Hong Kong and Singapore to trade in Nexen.

More than US$40 million in proceeds from suspicious Nexen trading were subsequently frozen, the SEC said in the court filing Monday, including US$15 million in alleged illegal profits.

In the months that followed, defendants began reaching settlements with defendants in the case.

In October 2012, Hong Kong-based Well Advantage agreed to pay more than US$14 million to settle the insider trading charges.

In March, Chinese businessman Ren Feng and his wife Zeng Huiyu, previously cited as unknown traders charged in the complaint, agreed to pay US$3.3 million.

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