5.08.2007

The Hong Kong Insiders


One of the stories I've been following is the alleged insider trading scandal of Dow Jones calls. It looks like today, the Securities and Exchange Commission has a small lead. It appears as if a Hong Kong couple were partially behind the curtain. From Yahoo! Finance: The U.S. Securities and Exchange Commission said Kan King Wong and Charlotte Ka On Wong Leung "engaged in widespread and unlawful trading activity" Whoops.

So what did they do wrong, or are accused of? They essentially bought 400 thousand plus shares of a company which they knew was going to get a takeover bid. So what was the fallout of all of this? This couple who mainly invested in fixed assets before, like bonds and the like all of a sudden invested in (had they not had any knowledge) highly speculative stuff. Their Merrill Lynch portfolio shot up 25 times its previous value. That's pretty amazing stuff.

Immediately after, on May 4, they put in an order to sell. Presumably they money they can extract will now be heading to Switzerland, Isle of Man and many of the other money havens that exist in the world. Aside from this being stupid due to its huge unethical factor, why push your luck for so much? Fixed assets to speculation. Come on the SEC is a lot smarter than that.

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