SEC Says Trader Made $29 Million Illegally From DreamWorks Dealby
Chinese man said to use multiple accounts in insider scheme
Regulator wins freeze on assets held in brokerage accounts
U.S. regulators froze brokerage accounts holding more than $29 million in what they say are illegal profits reaped by a Chinese national accused of insider trading ahead of Comcast Corp.’s April 2016 announcement that it planned to take over DreamWorks Animation.
Shaohua “Michael” Yin bought $56 million in DreamWorks stock in the weeks before Comcast revealed its plans, using five accounts including one belonging to his elderly parents, the Securities and Exchange Commission said Friday. The shares were sold after DreamWorks rose 47 percent between April 26, when news of the takeover was first reported, and April 28, when it was formally announced, the SEC said.
The SEC said Yin, 44, works for an investment firm based in Hong Kong and Beijing and maintains a residence in Palo Alto, California. The agency says he or the brokerage account holders tried to withdraw the illegal profits after FBI agents executed a search warrant on suspicion of insider trading at San Jose International Airport on Feb 3.
“Despite the defendant’s alleged attempts to hide his control over these accounts, the SEC’s data analytic investigative tools enabled us to determine who was behind the suspicious trading,” said Michele Wein Layne, head of the SEC’s Los Angeles office.
The accounts tied to Yin began to accumulate DreamWorks stock during April 2016, when the company was engaged in confidential merger talks with both Comcast and a China-based private-equity firm that made a $35 per share takeover offer. Comcast subsequently made an offer of $41 per share that was approved by the DreamWorks board.
Yin tried to hide the trading, which accounted for 17 percent of all market trading in DreamWorks between April 4 and April 25, by using accounts in the name of his parents, a teacher, and an electrical company employee, according to the SEC complaint filed in federal court in New York. Yin, who previously worked at Warburg Pincus and UBS AG, couldn’t be reached for comment. The SEC said he has no known defense counsel.