Federal securities regulators on Thursday settled an insider trading case against an investment firm controlled by prominent Hong Kong businessman.
The Securities and Exchange Commission announced that Well Advantage, a firm based in Hong Kong that is run by Zhang Zhi Rong, agreed to pay more than $14 million related to accusations that it illegally traded in the shares of the Canadian oil producer Nexen in advance of the announcement that it was being acquired by China National Offshore Oil Corporation, or Cnooc.
Mr. Zhang is a Chinese billionaire businessmen who, in addition to controlling Well Advantage, also controlled another company that had a close relationship with Cnooc, the S.E.C. said. Regulators accused Well Advantage of having advance knowledge of the Cnooc-Nexen deal.
In July, the S.E.C. had moved to freeze the assets of Well Advantage, accusing it of buying more than 830,000 shares of Nexen in the days leading up to the announcement that C nooc was buying it for $15 billion. When the deal was announced, Nexen shares spiked 60 percent, allowing the Well Advantage to earn more than $7 million in illegal profits. The total $14 million payment to the S.E.C. is double the amount of illicit gains.
“The speedy resolution of this case shows the serious consequences that await traders who engage in insider trading,†said Sanjay Wadhwa, the deputy chief of the S.E.C.'s enforcement division's market abuse unit.
Alan J. Brudner, a lawyer representing Well Advantage, declined to comment on the settlement, which is still subject to a federal judge's approval.
Mr. Zhang is worth $1.7 billion, according to Forbes magazine. He controls a variety of holdings, including the shipbuilding concern China Rongsheng Heavy Industry and a real estate company, Glorious Property.
