Ex-TPG Worker Reaches SEC Accord Over `Suspicious' Trades

  • TPG Capital put some employees on leave during internal probe
  • The two residents of China were sued by the SEC in November

A former TPG Capital employee in China and his cousin agreed to pay more than $920,000 to settle a U.S. lawsuit over “suspicious” trades in health-care companies.

Yannan Liu and his cousin Zhichen Zhou consented to a final judgment Monday in federal court in Manhattan. The men, who live in China, didn’t admit or deny wrongdoing in the Securities and Exchange Commission lawsuit.

“Insider trading is more damaging than it is profitable, as experienced by these traders,” Julie Lutz, an SEC director in Denver, said in a statement. “First they had their assets frozen by a court order, and now they must pay three times the amount of their insider-trading profit to settle the case.”

The judgment was the result of weeks of negotiations between the parties and doesn’t bar Liu from the industry. They must disgorge their joint proceeds of $306,930, and each must pay a penalty of $306,930. SEC spokeswoman Florence Harmon declined to comment on the terms of the settlement.

“We’re grateful that the SEC did not require a bar from the securities industry,” Liu’s lawyer, Marc Agnifilo of Brafman & Associates PC in New York, said in a phone call.

Zhou’s lawyer, Michael Gilbert of Dechert LLP in New York, didn’t immediately return a call for comment.

Inside Tips

The SEC in November accused Liu and Zhou of using inside tips about takeover offers for two U.S.-listed health-care companies, MedAssets Inc. and Chindex International Inc.

TPG, based in Fort Worth, Texas, put some employees at its Beijing office on leave as it conducted its own investigation into the claims. The company, which wasn’t accused of wrongdoing, previously said it cooperated with the SEC. Luke Barrett, a spokesman for TPG, declined to comment on the settlement.

According to the SEC, Zhou made “highly suspicious purchases” of MedAssets shares in the days leading up to a Nov. 2 announcement that Pamplona Capital Management LLP would acquire the Georgia-based company for about $2.7 billion. Zhou then sold all his MedAssets stock -- most of which was funded by a wire transfer from Liu -- for a profit, the regulator said. Zhou opened the account used for the share purchases just three weeks prior to his trades, the SEC said.

TPG was among several bidders for MedAssets, according to the regulator.

The case is SEC v. Zhou, 1:15-cv-08796, U.S. District Court, Southern District of New York (Manhattan).

(An earlier version of this story corrected the settlement amount.)

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