(Reuters) - The U.S. Securities and Exchange Commission has accused two Chinese citizens at a peer-to-peer lending platform of engaging in insider trading ahead of the announcement that two companies had agreed to be acquired by private equity firms.
In a lawsuit filed in Manhattan federal court that was made public Tuesday, the SEC said Zhichen Zhou, a web administrator at Yooli.com, engaged in "highly suspicious" trading in the stocks of MedAssets Inc and Chindex International Inc.
Both companies later announced private equity takeovers in deals where one of the bidders had been TPG Capital LP[TPG.UL], where Yooli.com CEO Yannan Liu, Zhou's cousin, had previously worked, the SEC said.
MedAssets earlier this month agreed to be acquired by Pamlona Capital Management for $2.75 billion. Chindex in February 2014 announced a $369 million deal to be taken private by a consortium including TPG.
The SEC said trading Zhou engaged in before those deals were publicly announced enabled him to make $306,930 in net profits.
SEC said "strong circumstantial evidence" existed establishing that those trades were thanks to Zhou engaging in insider trading with Liu, whose association with TPG put him in a position to obtain confidential information.
At the request of the SEC, U.S. District Judge Thomas Griesa issued an order freezing $1.23 million in accounts belonging to Zhou.
Lawyers for the defendants could not be immediately identified.
The case is Securities and Exchange Commission v. Zhou, U.S. District Court, Southern District of New York, No. 15-8796.