SEC Freezes Assets in Alleged Inside Scheme

MANHATTAN (CN) - The SEC said it got an emergency court order freezing the assets of traders using accounts in Hong Kong and Singapore who made more than $13 million in illegal profits by trading before the public announcement that China-based CNOOC is buying Nexen, of Canada.

Looking for more securities news? Click here to read Courthouse News' Securities Law Review.

The SEC sued Well Advantage Ltd. and Certain Unknown Traders in the Securities of Nexen in accounts of Phillip Securities and of Citibank, in Federal Court.

It claims that Hong Kong-based Well Advantage Limited and the unknown traders bought up Nexen shares based on inside information about the deal in the days before the announcement.

Well Advantage is controlled by Zhang Zhi Rong, whom the SEC describes as a "prominent Hong Kong businessman," who also controls another company that has a "strategic cooperation agreement" with CNOOC.

The SEC took emergency action to freeze the traders' asset "less than 24 hours after Well Advantage placed an order to liquidate its entire position in Nexen," the SEC said in a statement announcing its lawsuit.

CNOOC announced it was buying Nexen for $15.1 billion before New York markets opened on Monday, July 23, the SEC said. Nexen's stock price rose by 52 percent that day.

Well Advantage bought 830,000 shares of Nexen on July 19, and the other unknown traders bought 676,000 shares that week, the SEC said.

Altogether, the defendants made or could have made more than $13 million by selling their Nexen shares, the SEC said.

"The emergency court order obtained by the SEC freezes the traders' assets valued at more than $38 million and prohibits the traders from destroying any evidence," the SEC said in its statement.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit