A director on
board, which just voted to approve
$5 billion buyout offer, faces civil charges in an insider trading probe into events surrounding the deal, according to the
Wall Street Journal
, citing sources familiar with the matter, said Wednesday that director David Li, chairman and CEO of
Bank of East Asia Ltd.
, has received a Wells Notice from the
Securities and Exchange Commission
A Wells Notice is a notification that the SEC enforcement staff intends to recommend that the commission file a lawsuit. It typically allows its target one last chance to convince regulators that a case is unfounded.
Li is one of 16 members of the Dow Jones board of directors. The company announced late Tuesday that its board voted in principle to accept News Corp.'s $60-a-share offer to buy the company. Meanwhile, the deal still
faces its final hurdle in winning approval from the Bancroft family members, the company's controlling shareholders.
In May, the SEC filed civil charges against two Chinese investors, Kan King Wong and his wife, Charlotte Ka On Wong Leung. They bought 415,000 shares of Dow Jones two weeks before News Corp.'s blockbuster offer became public on May 1 and the stock price soared 58%. They reaped millions of dollars in profits when they sold the entire position on May 4, and a federal judge has frozen those assets.
Shares of Dow Jones spiked in price before news of the deal leaked to the media, raising eyebrows on Wall Street.
Li, who lives in Hong Kong, presumably had access to insider information about the buyout offer and was identified by the SEC as a person of interest in the case. It's unclear whether the probe will affect the sale of Dow Jones in any way.
Linda Dunbar, a spokeswoman for Dow Jones, declined to comment on the report. John Nester, a spokesman for the SEC, also declined to comment.
Shares of Dow Jones closed down 80 cents, or 1.4%, to $55.65.