Taiwanese Businessman Settles Insider Trading Charges for $25 Million
WASHINGTON (AP) _ Taiwanese businessman Fred C. Lee, implicated in a major insider trading case with a former Morgan Stanley junior analyst last year, agreed Wednesday to pay more than $25 million to settle civil charges.
In announcing the settlement, the Securities and Exchange Commission said Lee, 39, a Taiwanese national living in Hong Kong, agreed to pay $25.1 million in illegal profits and fines to a court-appointed receiver.
The SEC sued Lee in New York last year, charging that he engaged in $19 million insider trading scheme with Stephen K. Wang, then a 24-year-old analyst with Morgan Stanley & Co.’s mergers department.
Wang pleaded guilty Sept. 7 to one count each of securities, wire and mail fraud.
He was charged with taking about $200,000 to funnel confidential information to Lee on at least 25 takeover deals that were being handled by Morgan at the time. There was no allegation of wrongdoing by Morgan, which suspended and later fired Wang.
Trading for himself and about 30 other people with the inside information, Lee allegedly made $19 million, the SEC said.
SEC officials said that until the record $650 million settlement by the investment banking firm of Drexel Burnham Lambert Inc. pushed Ivan F. Boesky down the list to No. 2, the Lee-Wang case was the second-largest insider trading scheme ever prosecuted.
As part of the settlement, Lee agreed to pay $19 million into a fund to reimburse investors defrauded by his scheme.
Lee also will pay $1.5 million in fines and $4.5 million in back taxes with interest on his illegal trading profits.
In a related development, the SEC settled a lawsuit with Standard Chartered Bank, a British-based bank that held $12.5 million of Lee’s money at its Hong Kong branch.
The SEC got a federal judge in New York to order Standard Chartered to turn over in New York an amount equal to the money Lee had on deposit in Hong Kong. The bank complied but sued, claiming it was being put in a kind of financial double jeopardy because Lee was suing for the release of his $12.5 million in the Hong Kong courts.
The case went to the 2nd U.S. Circuit Court of Appeals in Manhattan, which had not ruled.
With the surrender of Lee’s $25 million, $300,000 was turned over to the bank for expenses incurred in the New York and Hong Kong lawsuits.
″The settlement of the case presents us with the outcome we were seeking and we are therefore pleased that we were able to discontinue our appeal,″ Martin Hayman, Standard Chartered Group’s chief legal officer, said in a statement issued in New York.
The bank has 700 branches in 50 countries.