SEC wins asset freeze against Chinese accused of insider trading 

The U.S. Securities Exchange Commission won on Wednesday a court order to freeze the assets of two Chinese nationals accused of insider trading for their “remarkably timed” purchases of call options in Chinese classified advertising website 58.com Inc.

The United States District Court for the Southern District of New York granted the SEC’s request to freeze the assets held by Xiaoyu Xia and Yanting Hu in U.S. brokerage accounts. It also scheduled a hearing on the matter for May 6, the U.S. regulator said in a statement.

The SEC said Xia and Hu made more than $2 million by investing in the call options just before it was revealed this month that 58.com agreed to buy a 43.2 percent stake in rival Ganji.com, and Tencent Holdings Ltd would invest $400 million in 58.com.

This caused 58.com’s share price to rise by about one-third.

Tencent didn’t immediately return a Reuters request for comment on the SEC insider trading investigation. Executives at 58.com and Ganji.com were not immediately available to comment.

58.com and Ganji.com signed a memorandum of understanding on March 14, nearly one month before the deal was formally announced, the SEC said.

Xia works at a Shanghai equity investment firm and held a brokerage account at Scottrade Inc, while Hu works at the Beijing office of a Chinese airline and managed her investments through Interactive Brokers, the SEC said in a court filing.

It was not immediately possible to contact Xia or Hu.

Hu is “closely associated” with an unnamed person that works at a global investment bank in Hong Kong that worked with Tencent on financial matters in 2015, the SEC added.

The SEC is also seeking to recoup illegal profit and to impose civil fines.

Source: Reuters – SEC wins asset freeze against Chinese accused of insider trading

---