Risk & Compliance

SEC Charges Couple in Dow Jones Trades

A husband and wife in Hong Kong allegedly purchased more than 400,000 shares shortly before Rupert Murdoch's $5 billion offer was publicly announced.
Laura DeMarsMay 8, 2007

The Securities and Exchange Commission has filed charges against a Hong Kong couple who allegedly engaged in illegal insider trading before the public announcement of Rupert Murdoch’s bid for Dow Jones.

The complaint, filed in U.S. District Court for the Southern District of New York, maintains that Kan King Wong and Charlotte Ka On Wong Leung were in possession of material, nonpublic information regarding Murdoch’s $5 billion offer. At the time, noted the SEC, the couple’s Merrill Lynch account in Hong Kong held just 2,500 shares of another company, worth $53,750.

According to the commission, Leung’s father wired $3.18 million from a bank in Brussels to their Merrill Lynch account, and the couple took out $4.5 million in loans, enabling them to purchase 415,000 shares of Dow Jones stock between April 13 and April 30.

On May 1, following the announcement of the takeover offer — which priced Dow Jones at $60 per share — the company’s share price rose from $37.12 to $57.28. On May 4, charged the SEC, Kan Wong issued an order to sell the shares, for a profit of about $8.1 million.

The SEC, which obtained a freeze on the assets in the Hong Kong account, is seeking disgorgement with prejudgment interest, civil monetary penalties, and permanent injunctions against the Hong Kong couple.

An attorney for the couple could not immediately be identified.

Meanwhile, Dow Jones stated that it has received subpoenas from the New York attorney general’s office for information related to trading in its stock and options. The company added that it intends to comply fully with the investigation.

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