Sun, Feb 03, 2008 - Page 11 News List

HK legislator fined in Dow probe

IT'S A DEAL David Li reached a settlement with the US Securities and Exchange Commission. As a result, he will not be barred from serving as an officer at a public firm


Former Dow Jones & Co director David Li (李國寶) and a Hong Kong couple settled a US Securities and Exchange Commission (SEC) investigation into alleged insider trading during the company's takeover by News Corp last year, two people with direct knowledge of the matter said.

Li, 68, chairman of Bank of East Asia Ltd and a member of Hong Kong's legislature, will pay a fine of about US$8 million. Kan King Wong (王敬景) and Charlotte Ka On Wong Leung (王梁家安) will forfeit a similar amount in trading profits, said the sources, who declined to be identified.

The commission approved the settlements at a closed-door meeting in Washington on Thursday and they may be announced as soon as next week, the sources said.

Li is the most high-profile figure to be penalized so far in an SEC crackdown on trading ahead of company mergers and acquisitions. The agency also sued former employees at UBS AG, Morgan Stanley, Bear Stearns Cos and Credit Suisse Group in the past year.

Li denied leaking confidential information after the SEC filed suit against the Wongs in federal court in Manhattan last May.

The suit claimed their well-timed bets on Dow Jones stocks earned them US$8.2 million in profit when Rupert Murdoch's News Corp unveiled a US$5.1 billion bid for the publisher of the Wall Street Journal.

Ranked by profits, the case was the largest among a spate of insider-trading lawsuits filed by US regulators against foreign investors last year.

In May, the SEC claimed that Ajaz Rahim, former head of investment banking for Faysal Bank Ltd in Karachi, Pakistan, reaped more than US$7 million by trading on tips from an associate at Credit Suisse in New York. SEC lawsuits also targeted people from Canada, Switzerland, the UK, Brazil and Taiwan.

Rahim has denied the accusations and is fighting extradition on related criminal charges.

Shares of Dow Jones surged 55 percent when News Corp's offer was announced on May 1. A week later, the SEC filed suit against the Wongs, claiming they bought 415,000 shares valued at more than US$15 million in less than three weeks, just before the takeover became public. Their buying spree allegedly accounted for more than 3 percent of the shares' total trading volume during the period.

The Financial Times reported late last month that Li was negotiating an agreement with the SEC.

A day later, the South China Morning Post quoted him saying he had "no knowledge" of the reported settlement.

He and the Wongs won't admit or deny wrongdoing under the accords, one of the people familiar with the case said.

Li will not be barred from serving as an officer or director at a US public company under his agreement with the SEC, the person said.

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