Billionaire 'out to resolve' alleged insider trading
Mainland tycoon Zhang Zhirong is said to have hired a lawyer to talk to US regulators
Billionaire Zhang Zhirong, who is at the centre of an insider-trading investigation involving China's biggest overseas acquisition attempt, has hired a specialist lawyer to help him negotiate with the US Securities and Exchange Commission (SEC) for a settlement.
People familiar with the matter told the South China Morning Post that Zhang wanted to avoid a fine by cutting a deal swiftly with the SEC to forfeit the multimillion-dollar profit the SEC alleged he made from trading stock in Canadian energy firm Nexen before CNOOC, China's largest offshore oil producer, unveiled a plan to acquire Nexen in a deal worth more than US$15 billion.
Usually, the US securities regulator fines people who profit illegally from insider trading three or more times the amount of profit they made.
Zhang told his lawyer, who specialises in SEC-related cases, that he wanted to minimise fines he might have to pay, the people said, asking not to be identified given the sensitivity of the matter. "He wants to make the big issue smaller and then turn the small issue into purely a money matter for him to resolve," one of the people said.
Zhang was also facing growing pressure from CNOOC, with which he used to have a good business relationship, to settle the SEC case quickly as the state-controlled energy company was lobbying relevant parties in Canada and the United States to support its proposed takeover of Nexen, the people said.
CNOOC did not want its bid for Nexen "to be politicised", one of the people said. "The [allegation] of Zhang's insider trading breaking out at this moment came as a very big surprise to CNOOC. It certainly damages the image of CNOOC."
Some US legislators and Canadian officials oppose the deal on the grounds that strategic energy resources should not fall into foreign hands. CNOOC is the Hong Kong-listed unit of China National Offshore Oil Corp.