The chief executive officer of 4399 Co., an online gaming company, was accused by the U.S. Securities and Exchange Commission of trading on illegal tips before the June 17 announcement that Qihoo 360 Technology Co. received a takeover offer.
The SEC alleged that Haijan Luo, 33, a citizen of China, made more than $1 million in the “remarkably timed purchase” of Qihoo call options shortly before news of the buyout offer was disclosed, according to a suit filed Tuesday in Manhattan federal court.
The SEC said it obtained an emergency court order Tuesday freezing Luo’s profits in a U.S. brokerage account and prohibiting him from destroying evidence while regulators conduct their investigation.
“The suspicious timing and size of Luo’s trades spurred us to move swiftly to freeze his proceeds and ensure that potentially illegal profits cannot be siphoned out of this account beyond a U.S. court’s jurisdiction,” said Andrew Calamari, head of the SEC’s New York office.
Luo instructed his brokerage firm on Monday to wire $600,000 to a bank account in Singapore, according to the SEC.
Qihoo, a Chinese Internet-security company whose businesses include operating Web games, received a takeover offer of $77 in cash per American depositary share, valuing the company at about $10 billion, from investors including Hongyi Zhou, its chairman and chief executive officer.
A lawyer for Luo couldn’t be immediately identified or located.