SEC charges four Chinese traders with insider trading

7 December 2011

The assets of four Chinese traders have been frozen after being charged with insider trading prior to a merger between educational companies.

According to the Securities and Exchange Commission (SEC), the four made more than $2.7 million in illegal profits after acquiring shares in the Beijing-based Global Education and Technology Group prior to a planned merger with London firm Pearson.

The four were found to have immediately begun selling the stock once the deal had been made public.

Some of the brokerage accounts belonging to Sha Chen, Song Li, Lili Wang and Zhi Yao were thought to have been inactive until they started betting heavily on Global Education shares.

Merri Jo Gillette, director of the SEC’s Chicago regional office, said: “On the basis of non-public information, these traders suddenly purchased massive amounts of Global Education shares in US brokerage accounts that had been largely inactive.”

“We’re pleased the court immediately granted our order to freeze these accounts before proceeds from the illegal trades could be transferred outside US jurisdiction.”

The SEC’s investigation alleged that a co-founder and board chairman of Global Education provided confidential information ahead of the deal going-head.

By Jim Ottewill

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