TPG Places Beijing Employees on Leave Amid Internal Probe

  • Move is a `precautionary measure,' firm's spokeswoman says
  • SEC last week charged ex-TPG employee with insider trading

TPG Capital has put some employees at its Beijing office on leave as it conducts its own investigation into U.S. allegations of insider trading by a former employee.

The move comes as a “precautionary measure” that is “in line with our policies,” according to a statement from a spokeswoman for Fort Worth, Texas-based TPG, who asked not to be named citing company policy. “It is important to note that no wrongdoing has been alleged and nothing should be inferred from such course of action.”

The statement didn’t name the employees or say how many were affected. The U.S. Securities and Exchange Commission last week charged Yannan Liu, a former TPG employee, and his cousin Zhichen Zhou with insider trading related to takeover offers for two U.S.-listed health-care companies, MedAssets Inc. and Chindex International Inc. TPG was involved in bids for both companies, according to an SEC complaint dated Nov. 9

“We are cooperating fully with the SEC on this matter,” the spokeswoman said. “We have commenced our own internal investigation and will not tolerate any misappropriation of information.”

The Wall Street Journal reported earlier that TPG, based in Fort Worth, Texas, had put some of its Beijing staff on leave.

Suspicious Purchases

Liu, a Hong Kong resident who worked as a venture capital and private equity associate at TPG between August 2011 and May 2012, maintains a “personal relationship” with at least one private equity professional who works for the firm in Beijing, the SEC said in its complaint, without naming the staffer. Zhou, a Beijing resident, was employed by what appeared to be an online shopping company based in China, the regulator said.

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 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 of almost $300,000, 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 private-equity firm was part of a consortium with Shanghai Fosun Pharmaceutical Group Co. that offered $369 million in February 2014 for Chindex, which was based in Bethesda, Maryland. After the bid, Zhou sold Chindex shares that he had bought prior to the announcement for a profit of about $7,500, the SEC said.

“Both acquisitions involved TPG Capital - Liu’s former employer - as a bidder,” the regulator said. “Liu’s association with TPG Capital put him in a position to obtain material, nonpublic information about the acquisitions.”

Before it's here, it's on the Bloomberg Terminal.