The Securities and Exchange Commission Tuesday accused two Hong Kong residents of using inside information to buy $15 million of Dow Jones & Co. stock ahead of an announcement that News Corp. was seeking to buy the company.
The lawsuit in U.S. District Court in Manhattan named as defendants Kan King Wong and Charlotte Ka On Wong Leung, a married couple living in Hong Kong.
According to the lawsuit, Mr. Wong and his wife, Charlotte, bought 415,000 shares of Dow Jones stock in the two weeks prior to the announcement last week that News Corp. had offered to buy Dow Jones.
After the public announcement, the value of Dow Jones stock rose 58%, causing the couple’s Merrill Lynch & Co. account to grow to $23 million, a net gain of $8.18 million. The lawsuit did not explain how the couple would have obtained inside information on the pending offer.
Federal and state authorities have said they are investigating suspicious options trading in Dow Jones stock prior to the announcement of News Corp.’s $5 billion bid for the financial news publisher.
News last Tuesday of the $60-per-share bid by Rupert Murdoch’s company sent Dow Jones shares soaring.
A spokesman for Dow Jones, which publishes The Wall Street Journal, said Monday that it has received a subpoena from the New York attorney general’s office and a request for information from the Securities and Exchange Commission regarding options trading. Dow Jones will “cooperate fully” with the authorities, company spokesman Howard Hoffman said.