Well Advantage Limited, a Hong Kong-based firm controlled by billionaire Zhang Zhi Rong, agreed to pay $14 million to resolve U.S. regulatory claims that it profited from illegal trades before Cnooc Ltd.’s announcement that it would buy Nexen Inc.
The settlement, which still must be approved by U.S. Judge Richard J. Sullivan in Manhattan, amounts to double the illicit profits Well Advantage is alleged to have made when it stockpiled shares of Nexen based on confidential knowledge of the pending deal, the Securities and Exchange Commission said in a statement yesterday.
Nexen’s stock rose more than 50 percent on July 23 after Cnooc, China’s largest offshore oil and gas explorer, said it would pay $15.1 billion in cash to acquire the Calgary-based company. Well Advantage’s owner, Zhang, is the controlling shareholder of China Rongsheng Heavy Industries Group Holdings Ltd., a Hong Kong-based company that engages in significant business activities with Cnooc, the SEC said.
“The speedy resolution of this case shows the serious consequences that await traders who engage in insider trading,” said Sanjay Wadhwa, deputy head of the SEC’s enforcement unit that polices for market abuse.
Well Advantage neither admits nor denies the charges, according to the SEC statement. The agency has sharpened its focus on Chinese companies in recent years.
Alan Brudner, an attorney for Well Advantage, declined to comment. Zhang declined to comment before the approval of the settlement, according to Summer Si from iPR Ogilvy in Hong Kong, which handles Zhang’s public relations.
China Rongsheng said today it isn’t in an “appropriate” position to comment on the personal issues of its chairman. The Chinese shipbuilder had said earlier that its day-to-day operations wouldn’t be affected by the case as Zhang has a non-executive role.
Zhang, 43, is the chairman and founder of Rongsheng, and Chinese developer Glorious Property Holdings Ltd.
Rongsheng won an order from state-owned Cnooc to build a deepwater pipe-laying vessel in 2007 and Cnooc was one of the cornerstone investors in its initial public offering in Hong Kong in November 2010.