SEC Settles Charges Against Chinese Inside Traders
The SEC has announced that two traders in China and Hong Kong have agreed to pay over $920,000 to settle an insider trading case against them.
The U.S. Securities and Exchange Commission (SEC) announced that two traders in China and Hong Kong have agreed to pay over $920,000 to settle an insider trading case against them.
Zhichen Zhou and Yannan Liu are cousins as well as business associates. Their assets were frozen by an emergency court order when the SEC’s complaint was filed against them just last month. These cousins must disgorge their entire ill-gotten profits of $306,929.59 and on top of that pay penalties of $306,929.59 each. The court approved the settlement on December 28, 2015.
The SEC’s complaint alleged that Zhou and Liu traded two health care company stocks (MedAssets and Chindex International) based on nonpublic information about their impending acquisitions by private equity firms.
Liu was a private equity associate at TPG Capital, which had ties to both of the deals, and maintains a personal relationship with at least one current TPG Capital employee.
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As a result, Zhou and Liu, who reside in Beijing and Hong Kong respectively, settled the charges without admitting or denying the allegations. They consented to the final judgment permanently enjoining them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Julie K. Lutz, Director of the SEC’s Denver Regional Office, commented:
Insider trading is more damaging than it is profitable, as experienced by these traders. First they had their assets frozen by a court order, and now they must pay three times the amount of their insider trading profit to settle the case.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
