Insider trading may derail merger

In China, a merger between two large state-owned railroad companies may be heading for trouble. Why? Apparently 20 executives in both companies AND their families were engaged in insider trading in the 6 months leading up to the announcement of the deal. According to the China Daily: 

Last October's merger plan actually disclosed the stock holdings of the executives and their relatives. It claimed that the executives were unaware of the plan when they engaged in the stock trading, and their various investment decisions were made solely based on the value and prospect of the companies.

The merger document showed that Cui Dianguo, president of the CNR, bought 15,000 shares in CSR at an average of price 5.14 yuan (87 cents) per share and sold 50,000 shares at the price of 5.96 yuan from April to October last year, according to the public information. But the company did not disclose how many shares Cui owned before April.

The largest amount of stocks traded were by Gao Zhi, CNS's vice-president and his relatives. They bought and sold nearly 2 million shares in CSR with total investment exceeding 10 million yuan prior to the trading suspension, according to the information.

So, the president of one of the two companies involved in this transaction claims not to have known that the deal was pending?  You know ... we can see you. 

-bjmq