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US SEC accuses HK couple of inside trading
Last Updated(Beijing Time):2007-05-09 13:41

The US Securities and Exchange Commission accused two Hong Kong residents of "widespread and unlawful trading activity" when they bought US$15 million of Dow Jones & Co stock ahead of an announcement that News Corp was seeking to buy the company.

The lawsuit filed yesterday in US District Court in Manhattan named as defendants Kan King Wong and Charlotte Ka On Wong Leung, a married couple. It alleged they made "highly profitable and highly suspicious" stock purchases based on inside information between April 13 and April 30.

The lawsuit did not explain how the couple would have obtained inside information on the pending offer. There was no information on whether the couple has a lawyer in the United States. A message left with the SEC lawyer who filed the lawsuit was not immediately returned.

The couple's phone number was unlisted in Hong Kong, and a security guard at the luxury apartment complex where they live would not allow a reporter to ring the door bell at their residence. The guard said this morning that the couple had already gone to work.

According to the lawsuit, Wong and his wife bought 415,000 shares of Dow Jones stock in the two weeks prior to the May 1 announcement that News Corp had offered to buy Dow Jones.

The purchases occurred while the couple possessed material non-public information about the offer of News Corp to acquire Dow Jones, the lawsuit said.

"In advance of the announcement, defendants engaged in widespread and unlawful trading activity," the lawsuit said.

After the public announcement, the value of Dow Jones stock rose 58 percent, causing the couple's Merrill Lynch & Co account in Hong Kong to grow to US$23 million, a net gain of US$8.18 million.

The couple did not have enough money in their brokerage account to buy all the shares of Dow Jones stock on April 13 so US$3.18 million was wired to their account five days later from the father of Charlotte, according to the lawsuit.

Source:Shanghai Daily 
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