According to SEC, Sha Chen, Song Li, Lili Wang, Zhi Yao and All Know Holdings, have been alleged with purchasing American Depository Shares (ADS) of Beijing-based Global Education and Technology Group following a planned merger with London-based Pearson.
The brokerage accounts had been largely inactive until sudden purchase of massive amounts of Global Education shares while in possession of material, non-public information about the merger.
SEC’s Chicago regional office director Merri Gillette said that the accounts have been freezed to stop transfer of illegal trade proceeds outside US jurisdiction.
More than $2.7m of assets held in US brokerage accounts have been seized, grants expedited discovery and prohibits the defendants from destroying evidence.
Pearson had agreed to acquire all of Global Education’s outstanding stock for $294m ($11.006 per share traded in the US).
The SEC has sought for permanent injunctions, expulsion of ill-gotten gains with prejudgment interest, and financial penalties.
