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Founder of China-Backed Firm Facing Insider Trading Charges

Updated on
  • Canyon Bridge’s Benjamin Chow indicted for securities fraud
  • Company agreed to acquire U.K.’s Imagination Tech in September

The co-founder of the Chinese private equity firm that has agreed to take over the U.K.’s Imagination Technologies Group Plc has been charged with insider trading by U.S. authorities. 

Benjamin Chow has been indicted for conspiracy to commit securities fraud in connection with $5 million insider trading scheme relating to the securities of U.S. chipmaker Lattice Semiconductor Corp., the U.S. Attorney’s Office for the Southern District of New York said in a statement late Monday.

Chow co-founded Canyon Bridge Capital Partners, which in September agreed a 500-million-pound ($660.5-million) takeover of Imagination, after President Donald Trump rejected a takeover by Canyon Bridge of Lattice Semiconductor Corp.

Shares in Imagination fell as much as 2.5 percent to 175.5 pence in London on Tuesday, well below the 182 pence a share agreed by Canyon Bridge to acquire Imagination.

“We are focused on completing the planned acquisition of Imagination Technologies," Canyon Bridge said in an emailed statement. "Canyon Bridge is committed to continued investment in enabling technology companies to reach their full long-term growth potential.”

George S. Canellos, counsel for Chow, said: "Mr. Chow is a true American success story, and the charges against him are baseless and unprecedented."

Imagination Technologies declined to comment.

The charges from the U.S. authorities mark another chapter in a rough year for the U.K. designer of graphics chips, once a star of the British tech industry. In March, it disclosed that Apple Inc., which accounts for more than half of its sales, would no longer use its technology. That triggered a stock slump of more than 50 percent.

The charges from acting U.S. Attorney Joon H. Kim and the U.S. Federal Bureau of Investigation allege that Chow provided a friend and business associate with material non-public information relating to the merger of Canyon Bridge and Lattice.

Canyon Bridge is investing on behalf of a Chinese venture capital fund sponsored by China Reform Fund Management, a state-owned asset manager.

"We believe there is still not-insignificant tail risk in this deal," Jonny Gordon, head of event driven sales trading at Sun Hung Kai Financial UK Ltd., said in an emailed comment about Canyon Bridge’s acquisition of Imagination. "We haven’t seen the financing documents but there could be covenants in that relating to charges being brought against any Directors of Canyon Bridge."

— With assistance by William Canny

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