The U.S. Securities and Exchange Commission obtained a second emergency court order to freeze assets of traders who allegedly profited from insider knowledge of Cnooc Ltd. (883)’s bid for Nexen Inc. (NXY)
The second order relates to $6 million held by unknown traders, who the SEC alleges reaped $2.3 million by trading illegally ahead of Cnooc Ltd.’s July 23 announcement that it would buy the Canadian oil company.
Nexen’s stock rose more than 50 percent on July 23 after Beijing-based Cnooc said it would pay $15.1 billion in cash to acquire the Calgary-based company. The deal will be a test of the U.S.’s willingness to allow large Chinese investments as Nexen operates in the U.S. portion of the Gulf of Mexico.
The SEC said the traders opened a U.S. brokerage account through Hong Kong-based CSI Capital Management Ltd. a week before the the Cnooc-Nexen deal. On July 27, the SEC first announced it suspected insider trading on the deal with a court order to freeze the assets of traders who allegedly reaped more than $13 million from illegal trading.
Hong Kong-based Well Advantage Ltd. and unknown traders had bought Nexen stock based on “nonpublic information” and made an illegal profit of $13 million, the SEC said in a statement on July 27. Well Advantage is controlled by Chinese billionaire Zhang Zhirong.
iPR Ogilvy in Hong Kong, which handles Zhang’s public relations, declined to comment on the latest SEC charges. Jonathan Li, a spokesman at Hong Kong’s Securities and Futures Commission, declined to comment on the case.
The latest court order has swelled the assets frozen in connection with the insider trading charges to more than $44 million, the SEC said.
CSI Capital Management Ltd. is a British Virgin Islands incorporated company located in Hong Kong, according to SEC filings. CSI Capital is owned by a unit of Citic Securities Co., China’s largest brokerage by market value. Two calls seeking comment to Citic Securities’ Beijing-based spokesman Raymond Tang, weren’t answered today.
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