Former PE exec to face SEC fraud charges

A former private equity executive must face Securities and Exchange Commission charges for profiting $36 million from insider trading on deals connected to Asian private equity firms, a federal judge ruled in late March.

Michael Yin, a former partner at Hong Kong-based Summitview Capital Management, was charged with fraud by the SEC in early February last year. He resigned from Summitview shortly afterwards.

Yin had sought to have the case dismissed saying that the SEC lacked sufficient detail to support its case, but US District Judge Paul Oetken said the agency could pursue the case, having offered enough details to support its claims, according to news reports.

The charges relate to profits made by Yin in April 2016 through the sale of shares in DreamWorks Animation, which was eventually sold for $3.8 billion to Comcast, and on the sale of stock in chip maker Lattice Semiconductor in November 2016 that was subject to a bid by a Chinese government-owned private equity fund.

The SEC alleges that Yin bought more than $56 million in DreamWorks stock using brokerage accounts of five Chinese nationals, including his elderly parents. The sale of those shares reaped $29 million when DreamWorks’ stock price rose 47 percent after the Comcast acquisition.

The regulator also claims Yin made more than $7 million from the sales of shares in semiconductor maker Lattice Semiconductor, after it agreed a $1.3 billion sale to Chinese private equity firm Canyon Bridge Capital Partners. In September US President Donald Trump blocked the deal on national security grounds. The Chinese government is the majority financial backer of Canyon Bridge.

The SEC insider-trading allegations also extend to the profitable sales of shares in three China-based companies ahead of market-moving announcements.

Prior to joining Summitview in 2011, Yin, a Chinese citizen, had worked with Warburg Pincus Asia and UBS Investment Bank.

In an updated charge, the SEC named another China-based private equity executive, Chaofeng Ji at Legend Capital, saying he was suspected of aiding Yin in the DreamWorks deal. Prior to the Comcast deal for Dreamworks, Asian private equity firm PAG Asia Capital had submitted a bid for the studio behind films such as Shrek and Madagascar. The SEC said Legend was working with PAG on its offer.

Neither Summitview, PAG Asia Capital nor Legend have been accused of wrongdoing.