SEC alleges insider trading ahead of CNOOC's Nexen bid

The US Securities and Exchange Commission accused traders of “misusing inside information” to illegally profit from Chinese state-owned oil company CNOOC’s (CEO.NYSE, 0883.HKG) bid to acquire Nexen (NXY.NYSE, NXY.TSE), Bloomberg reported. Hong Kong-based traders at Well Advantage and other unnamed firms allegedly stockpiled shares of Nexen stock in the seven trading days ahead of CNOOC’s bid, after which the stock climbed more than 50% and the traders reaped US$13 million in profit. The SEC froze US$38 million in assets of traders after obtaining a court order. Zhang Zhi Rong, sole owner of Well Advantage, is also a controlling shareholder of a Hong Kong petrochemical engineering firm with close ties to CNOOC. Meanwhile, a separate report indicated that CNOOC is considering borrowing several billion dollars to finance its US$15.1 billion bid for Nexen. If the bid is approved, CNOOC’s acquisition of Nexen will be the biggest overseas takeover by a Chinese firm.