WASHINGTON (Reuters) - A Chinese private equity executive has been charged by the U.S. Securities and Exchange Commission with reaping $29.05 million of illegal profit from insider trading ahead of Comcast Corp’s (CMCSA.O) purchase of DreamWorks Animation SKG Inc.
The SEC said it also obtained a court order freezing five brokerage accounts controlled by Shaohua “Michael” Yin, 44, a partner at Hong Kong-based Summitview Capital Management Ltd and graduate of the University of Pennsylvania’s Wharton School.
Yin was accused of trading illegally in DreamWorks stock before the $3.8 billion takeover was announced, through Interactive Brokers accounts held in the names of five other Chinese nationals, including his septuagenarian parents.
The defendant, who has homes in Beijing and Palo Alto, California, was charged a week after the FBI executed a search warrant on his mobile phone for evidence of insider trading, as he prepared to board a flight to Beijing from San Jose, California, the SEC said.
Friday’s civil lawsuit seeks fines, the return of illegal profit, and other remedies.
Yin did not immediately respond to an email seeking comment. It was unclear whether he has hired a lawyer.
Summitview was not charged, and did not immediately respond to a request for comment outside business hours.
According to the SEC, Yin spent $56.3 million on nearly 2.15 million DreamWorks shares in a three-week period after PAG Asia Capital, an Asia-focused private equity fund manager, made a confidential bid to buy the film studio last March 31.
Yin unloaded the shares around the time of Comcast’s April 28 announcement that it would buy DreamWorks for $41 per share, well above the $26.25 average price he paid, the SEC said.
“The precision with which these trades were timed, combined with the sheer scale in which they occurred, could not be the product of chance,” the SEC said in its complaint filed with the U.S. District Court in Manhattan.
U.S. District Judge Paul Oetken froze the five accounts following what the SEC said were several withdrawal requests in the wake of the search warrant.
The SEC said the accounts also profited in securities of China-based 58.com Inc (WUBA.N), Ctrip.com International Ltd (CTRP.O) and Giant Interactive Group Inc ahead of market-moving announcements, and conducted “suspicious and profitable trading” in U.S.-based Lattice Semiconductor Corp (LSCC.O).
Friday’s lawsuit named as “relief” defendants Yin’s mother Lizhao Su, his father Zhiqing Yin, Jun Qin, Yan Zhou and Bei Xie. The DreamWorks takeover closed in August.
The case is SEC v Yin et al, U.S. District Court, Southern District of New York, No. 17-00972.
Reporting by Jonathan Stempel and Eric Walsh