The U.S. Securities and Exchange Commission won an asset freeze against two Beijing residents accused by the agency of insider trading ahead of the merger announcement of two Chinese e-commerce companies, 58.com and ganji.com.
Xiaoyu Xia and Yanting Hu each bought out-of-the-money call options in 58.com in the period between when the two companies and Tencent Holdings, 58.com’s largest shareholder, agreed to the merger and when the merger was first reported on April 14, the SEC said in a statement Wednesday.
The two each traded through U.S. brokerage accounts and their purchase of the call options yielded profits totaling more than $2 million, the SEC said. The share price of 58.com rose by more than a third and trading volume increased more than twenty-fold when the merger was announced, the agency said.
The asset freeze request was granted by the U.S. District Court for the Southern District of New York, the SEC said. A hearing is scheduled for May 6, the agency said.