SEC Freezes Assets of China-Based Trader for Suspicious Trades on Qihoo
The regulator cites suspicious timing and size of trades ahead of a $9 billion buyout offer
The U.S. Securities and Exchange Commission sign at its headquarters in Washington. The SEC froze assets of a China-based trader over suspicious activity ahead of Qihoo’s buyout offer. PHOTO: BLOOMBERG NEWS
June 23, 2015 10:26 p.m. ET
HONG KONG—The U.S. Securities and Exchange Commission got a court order Tuesday to freeze the assets of a China-based trader for suspicious activity ahead of a $9 billion buyout offer for a U.S.-listed Chinese Internet company last week.
Haijian Luo, chief executive of a Chinese online company, bought approximately $700,000 of out-of-the-money call options before last week’s announcement of a buyout offer for Qihoo 360 Technology, according to a news release from the SEC.
Mr. Luo has made more than $1 million from the bets and had requested his brokerage firm transfer more than half of the proceeds to a foreign bank account, the regulator said.
“The suspicious timing and size of Luo’s trades spurred us to move swiftly to freeze his proceeds and ensure that potentially illegal profits cannot be siphoned out of this account beyond a U.S. court’s jurisdiction while our investigation continues,” saidAndrew M. Calamari, regional director of the SEC’s New York office, in the release.
The SEC said Mr. Luo hadn’t traded Qihoo securities in his recently opened U.S. brokerage account.
Qihoo said last Wednesday it received a buyout offer from a group that includes its chairman at $77 per American depositary share. The offer came at a 17% premium to last Tuesday’s close and its shares jumped 6.2% last Wednesday.