Tuesday, February 5, 2008
The SEC today announced a $24 million settlement with a former Dow Jones & Company board member and three other Hong Kong residents accused of illegal tipping and insider trading ahead of news that News Corp. made an unsolicited buyout offer for Dow Jones stock. The SEC alleged that David Li Kwok Po, a Dow Jones board member at the time who also is Chairman and CEO of the Bank of East Asia and a member of Hong Kong's Legislative Counsel and Executive Committee, learned of the then-secret News Corp. offer and illegally tipped his close friend Michael Leung Kai Hung. The SEC also alleged that Leung, with the help of his daughter Charlotte Ka On Wong Leung and son-in-law Kan King Wong purchased approximately $15 million worth of Dow Jones securities in their account at Merrill Lynch. They stood to make approximately $8 million in illicit profits had the SEC not won an emergency court order within days of the News Corp. offer, freezing the account.
Without admitting or denying the Commission's allegations, David Li, Michael Leung, K.K. Wong and Charlotte Wong consented to the entry of court orders enjoining them from federal securities violations. David Li is ordered to pay an $8.1 million civil penalty. Michael Leung is ordered to pay $8.1 million in disgorgement plus prejudgment interest and an $8.1 million penalty. K.K. Wong is ordered to pay $40,000 in disgorgement plus prejudgment interest and a $40,000 civil penalty. The SEC's complaint is available at its website.