WASHINGTON (Sputnik) — The SEC’s announcement comes as discussions are going on at the US-China Strategic and Economic Dialogue in Washington, DC. The forum is a mechanism to generate cooperation between the two countries, according to the US Department of the Treasury.
“[The SEC] today obtained an emergency court order to freeze the assets of a trader in China who profited by more than $1 million after trading in a US brokerage account in advance of last week’s public announcement that China-based Qihoo 360 Technology Co. Ltd. had received a buyout offer at a significant premium from its CEO and a consortium of other affiliates,” the SEC statement read on Tuesday.
According to the SEC, Haijian Luo allegedly placed bets that the stock prices of Chinese Internet giant Qihoo would quickly jump, and then proceeded to buy some $700,000 worth of “out-of-the-money call options” before the buyout was announced.
Once the Chinese company’s stock price rose, Luo sold the stock option and asked his brokerage firm to transfer over half of the $1 million he had made to his foreign bank account, even though he had no experience trading Qihoo securities.
“The suspicious timing and size of Luo’s trades spurred us to move swiftly to freeze his proceeds and ensure that potentially illegal profits cannot be siphoned out of this account beyond a US court’s jurisdiction while our investigation continues,” SEC New York office Regional Director Andrew Calamari said in the statement.