SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office deputy chief Sanjay Wadhwa said Well Advantage and the other traders engaged in an all-too-familiar pattern of misusing inside information to place extremely timely trades and profit handsomely from their illegal acts.
"Despite the challenges of investigating misconduct in the U.S. by trading accounts located overseas, we have moved swiftly to freeze the assets of these suspicious traders and will hold them accountable for their actions," Wadhwa added.
The SEC filed a complaint in federal court in Manhattan and claimed that CNOOC and Nexen announced before the markets opened on 23 July that CNOOC has agreed to buy Nexen for nearly $15.1bn.
During the course of investigation, SEC found that Well Advantage and certain unknown traders had material nonpublic information about the posible acquisition when they purchased Nexen’s stock in the days leading up to the public announcement.
Well Advantage, managed by Hong Kong businessman Zhang Zhi Rong, purchased over 830,000 shares of Nexen on 19 July and gained an unrealized trading profit of more than $7m based on Nexen’s closing price on the day of the announcement.
The other unknown traders used accounts located in Singapore to purchase more than 676,000 Nexen shares in the days preceding the announcement and disposed almost all of the stock after the announcement making profits of about $6m.
The commission is seeking a final judgment ordering the traders to disgorge their ill-gotten gains with interest, pay financial penalties, and permanently bar them from future violations.
