[ by Melanie Gretchen ]

The SEC last year busted a Chinese businessman and his wife over alleged insider trading of Nexen Inc. securities while possessing nonpublic information about the company's impending acquisition by China-based CNOOC Ltd.  The Agency was able to obtain orders freezing several Hong Kong and Singapore-based trading accounts just days after the Nexen acquisition was announced and suspicious trading in Nexen stock was detected.

SEC Findings and Regulations.   Ren Feng and his wife Zeng Huiyu, were charged with insider trading, as were Ren’s private investment company (CT Prime Assets Limited) and 4 of Zeng’s brokerage customers on whose behalf she traded.  The group made illicit profits of $2.3 million.

"This settlement requires full disgorgement of the insider trading profits of this group of foreign traders, and Ren and Zeng must additionally pay sizeable penalties.  This should send a stern warning to anyone contemplating insider trading in U.S. markets from abroad that the SEC uncovers such misconduct and the end result is a severe financial setback rather than a windfall." -- Sanjay Wadhwa, Sr Associate Director of SEC NYRO.

SEC Sanctions. To settle SEC charges, the respondents agreed to pay more than $3.3 million combined, subject to court approval, including:

• the couple agreed to jointly pay $840K in disgorgement and $840K in penalties.
• Zeng agreed to pay $404K in disgorgement and penalties.
• Zeng's customers agreed  to pay a total of $916K in disgorgement.

For further details, go to [SEC PR 13-50, 3/29/13]  and  [SEC Complaint, 7/27/12].

To contact Melanie Gretchen: melanie@compliance-insights.com.