SEC Announces Insider Trading Charges Linked to China Tech Deal; SEC alleged two Beijing residents bought out-of-the-money call options before deal was announced

http://www.wsj.com/articles/sec-announces-insider-trading-charges-linked-to-china-tech-deal-1430370540

SEC Announces Insider Trading Charges Linked to China Tech Deal; SEC alleged two Beijing residents bought out-of-the-money call options before deal was announced

NED LEVIN

April 30, 2015 1:09 a.m. ET

The U.S. Securities and Exchange Commission announced insider trading charges against two Beijing residents on Wednesday, alleging they purchased stock options ahead of Chinese e-commerce company 58.com’s purchase of a $1.6 billion minority stake in rival Ganji.com.

The regulator said a court had granted its request to freeze assets in the U.S. brokerage accounts of Xia Xiaoyu and Hu Yanting. The SEC alleged the two bought out-of-the-money call options, or bets that the stock price of a company will go up, in New York-listed 58.com after the deal was signed but before it was announced. The SEC said Mr. Xia and Ms. Hu had profited by more than $2 million through their purchase of the options. 58.com’s stock surged by 34% after it was initially reported that the two companies would agree to a deal. Continue reading