According to the complaint by the SEC, certain traders had used accounts in Singapore and Hong Kong to reap more than $13 million in illegal profits. The accused traders bought up Nexen shares ahead of the deal. The SEC complained that the traders, including Hong Kong based Well Advantage, had ‘stockpiled’ shares ahead of the deal by acting upon inside information.
On July 23, China’s state-run company, the CNOOC announced that it had agreed to acquire Nexen for a sum of $15.1 billion. The shares of Nexen rose in value by almost 52 percent on the date of announcement. The fact also raised questions among market-watchers regarding the number of well-timed and aggressive bids in Nexen shares made just ahead of the announcement by CNOOC.
The SEC said that the chief accused, Well Advantage, is controlled by a Hong Kong businessman who also has another company with a “strategic cooperation agreement” with CNOOC. The freeze was sought by the SEC a day after Well Advantage placed an order to liquidate its Nexen position.
Sanjay Wadhwa, the deputy chief of the market abuse unit in the SEC’s enforcement division said, “Well Advantage and these other traders engaged in an all-too familiar pattern of misusing inside information to place extremely timely trades and profit handsomely from their illegal acts.”