Linus Unah – Fourth Estate Contributor
Washington, DC, United States (4E) – The U.S. Securities and Exchange Commission (SEC) Friday said it will freeze brokerage accounts holding more than $29 million in illegal profits from insider trading ahead of Comcast Corp.’s April 2016 acquisition of DreamWorks Animation SKG Inc.
The SEC said the alleged insider trading scheme was led by Chinese national Shaohua “Michael” Yin, a 44-year-old partner of a Hong Kong-based private equity firm Summitview Capital Management Ltd.
The U.S. regulator alleged that in the weeks leading up to the news of the acquisition, Shaohua (Michael) Yin amassed more than $56 million of DreamWorks stock in the U.S. brokerage accounts of five Chinese nationals, including his elderly parents.
DreamWorks stock price rose 47.3 percent once the acquisition was announced, according to the SEC.
In a complaint filed in a New York federal court, the SEC alleged the five accounts reaped $29 million from the DreamWorks trades.
The complaint also alleged that the accounts profited from other suspicious trading in another U.S.-based company and three China-based companies ahead of market-moving news.
Yin also allegedly didn’t trade in DreamWorks stock through his own account but instead traded through five accounts from addresses in Beijing and Palo Alto and on a computer that also accessed his email accounts.
“Despite the defendant’s alleged attempts to hide his control over these accounts, the SEC’s data analytic investigative tools enabled us to determine who was behind the suspicious trading,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.
“Our action today shows that the SEC will not hesitate to freeze the assets of foreign traders when they use our markets to conduct illegal activity.”
Judge J. Paul Oetken of the U.S. District Court for the Southern District of New York granted the SEC’s request for an asset freeze of the five brokerage accounts and issued an order to show cause why an injunction and other relief should not be issued.
A hearing has been scheduled for February 17.
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