SEC Adds Defendant to Pending Insider Trading Case Against Chinese Citizens

SEC v. All Know Holdings, LTD et al., Case No. 11-cv-8605 (N.D. Ill).  On October 12, 2012, the SEC announced new charges in a pending insider trading case against several Chinese citizens and a Chinese-based entity.  The SEC previously charged the defendants with insider trading after they obtained more than $2.8 million in profits by trading in advance of a publicly announced merger.  The SEC has added Jie Meng as a defendant.  Meng was a friend of someone who worked at one of the merging companies and knew about the deal.  Meng learned about the deal and was also told that it was “top secret.”  The friend sent Meng $40,000 to purchase stock.  In addition Meng used $35,000 from a bank shared with another defendant and bought the stock.  After the merger was announced, Meng sold the stock for a profit of more than $142,000. 

Meng is charged with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Without admitting or denying the allegations, Meng consented to the entry of a final judgment enjoining Meng from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, ordering Meng to pay disgorgement of $142,052 plus prejudgment interest of $2,141, and ordering a civil monetary penalty of $71,000.

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