CORRECTED-Two Hong Kong firms to pay $11 mln to settle SEC insider trading charges

Mon Jan 27, 2014 4:20pm EST

(Corrects name of defendant in fourth paragraph that is paying $6.6 million to CITIC Securities International Investment Management (HK) Ltd)

By Nate Raymond

NEW YORK Jan 27 (Reuters) - Two Hong Kong asset management firms have agreed to pay $10.9 million to settle charges by the U.S. Securities and Exchange Commission of insider trading ahead of a bid by China's CNOOC for Canadian oil company Nexen Inc.

The proposed accord, disclosed in a court filing Monday, would add to the more than $18 million the U.S. securities regulator had previously secured in settlements as part of an investigation into suspicious trading linked to the July 2012 deal.

China Shenghai Investment Management Limited and eight of its clients including an individual named Stephen Wong have agreed to give up nearly $4.27 million in profits realized trading in Nexen stock.

CITIC Securities International Investment Management (HK) Ltd, a joint venture between CITIC Securities International Company Ltd and a company owned by China Shenghai's principal, James Wang, has agreed to pay nearly $6.6 million in disgorged profits and penalties.

The deal requires approval by U.S. District Judge Richard Sullivan in New York.

Lawyers for the corporate defendants did not immediately respond to requests for comment, while a lawyer for Wong declined comment. A spokesman for the SEC declined comment.

CNOOC announced July 23, 2012, that it agreed to acquire Nexen for $15.1 billion in what became China's biggest foreign takeover bid. Shares of Nexen climbed almost 52 percent that day.

Five day later, though, the SEC went to court and obtained a court order seeking to freeze the assets of traders using accounts in Hong Kong and Singapore to trade in Nexen.

More than $40 million in proceeds from suspicious Nexen trading were subsequently frozen, the SEC said in the court filing Monday, including $15 million in alleged illegal profits.

In the months that followed, defendants began reaching settlements with defendants in the case.

In October 2012, Hong Kong-based Well Advantage agreed to pay more than $14 million to settle the insider trading charges.

In March, Chinese businessman Ren Feng and his wife Zeng Huiyu, previously cited as unknown traders charged in the complaint, agreed to pay $3.3 million.

The case is Securities and Exchange Commission v. Well Advantage Limited et al, U.S. District Court, Southern District of New York, No. 12-5786. (Reporting by Nate Raymond in New York; Editing by Bernard Orr)

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