The Wall Street Journal-20080129-Dow Jones-s Li Is to Settle- Ex-Director Agrees To Pay --36-8 Million In Deal With SEC
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Dow Jones's Li Is to Settle; Ex-Director Agrees To Pay $8 Million In Deal With SEC
Full Text (504 words)The Securities and Exchange Commission has reached a tentative deal with former Dow Jones & Co. director David Li in which he would pay more than $8 million to resolve insider-trading charges related to the company's sale to News Corp., according to people familiar with the matter.
The preliminary settlement, reached with the SEC enforcement staff several weeks ago, requires approval by the agency's commissioners, a person familiar with the matter said. The commission could vote to approve the settlement in the next few weeks. As part of the deal and as is customary with SEC settlements, Mr. Li, chairman and chief executive of Bank of East Asia Ltd., isn't admitting or denying wrongdoing.
A spokesman for Mr. Li declined to comment yesterday, as did a lawyer for Mr. Li in Hong Kong.
The settlement talks were previously reported by the Financial Times.
In May, the SEC sued the husband-and-wife couple Kan King Wong and Charlotte Ka On Wong Leung for allegedly borrowing millions of dollars to buy Dow Jones stock two weeks before talks with News Corp. were made public. Three days after the offer became public, the Wongs placed an order with their Merrill Lynch & Co. broker to sell the entire amount, with a paper profit of $8 million.
Merrill Lynch notified the SEC, and a U.S. court subsequently froze the assets. Mr. Li, who had been a director of Dow Jones since 1993 and until its takeover by News Corp. in December, has a professional and personal relationship with Michael Leung, Ms. Wong's father, who financed two of the Wongs's purchases, according to the SEC complaint.
In May, Mr. Li told The Wall Street Journal, "I did not disclose to anyone, not even my wife, any information about Dow Jones." Regarding Mr. Leung, he said, "I know Michael, and he is a friend, but I certainly did not talk to him about Dow Jones."
The Wongs were scheduled to appear in Manhattan federal court yesterday, but the hearing was postponed until next month because of settlement negotiations, according to a person familiar with the matter. The SEC is negotiating for the Wongs to pay $8 million in disgorgement of ill-gotten gains, a person said.
A lawyer for the Wongs didn't return a call for comment.
The law permits the SEC to seek as much as three times the amount of profits made by insider trading and also allows the SEC to hold all parties jointly and severably liable. Mr. Li has agreed to pay the $8 million as a fine, a person familiar with the matter says, the amount the couple allegedly made from trading.
Under the terms of the tentative deal, Mr. Li won't be banned from serving as an officer or director of a publicly traded company, this person said.
It isn't clear exactly what evidence the SEC has to tie Mr. Li to the couple's trading, although it appears the agency's theory is that Mr. Li allegedly shared important, nonpublic information with someone outside of Dow Jones.
