The Securities and Exchange Commission has charged a Chinese investor and his family members with illegally profiting from Comcast Corp.'s $3.8-billion acquisition last year of DreamWorks Animation.
The government on Friday obtained an emergency court order to freeze brokerage accounts used in the alleged insider trading scheme led by Shaohua "Michael" Yin, a 44-year-old former partner of Summitview Capital Management Ltd. in Hong Kong. Yin and other defendants allegedly made $29 million in profits by illegally trading DreamWorks shares.
The SEC lawsuit said during a three-week period last April — before news of Comcast's interest in DreamWorks became public — five brokerage accounts allegedly controlled by Yin amassed more than 2 million shares, worth about $56 million. The stock in the animation studio was bought for about $26 a share.
The accounts were opened in the name of several Chinese citizens, including Yin's elderly father and mother, who were also named as defendants.
Before April 2016, the accounts had never held any shares of DreamWorks, the Glendale animation studio behind "Shrek" and "Kung Fu Panda."
"Placed in context, the purchases by these five individual trading accounts — nominally owned by two elderly retirees, an electrical company employee, a teacher and a natural resources manager — accounted for 16.9% of all market trading in DreamWorks," the complaint said.
Comcast offered DreamWorks $41 a share. After Comcast's interest became public, DreamWorks shares soared nearly 50%.
Before the Comcast bid, PAG Asia Capital, a private equity fund, was in advanced negotiations to buy DreamWorks, which has operated a studio in Shanghai through a joint venture with Chinese investors.
Yin, a former UBS banker who has an MBA from the Wharton School at the University of Pennsylvania, has homes in Beijing and Palo Alto. The SEC alleged that he has made illegal trades of stock of other companies, and the FBI executed a search warrant on Yin at the San Jose International Airport on Feb. 3, just before he boarded a flight to China, according to the complaint filed in U.S. District Court in New York.
Yin's former employer, Summitview Capital Management, said in a statement provided to the Times on Tuesday that it was reviewing the "allegations in the SEC complaint and Mr. Yin's conduct and any potential effect on the company."
"The allegations are directed against Mr. Yin's actions in a personal capacity and not against Summitview," the firm said, adding that Yin resigned last week. His resignation came days after the FBI executed the search warrant in San Jose, and three days before the SEC announced that it had obtained a court order to freeze the assets in question.
The SEC is seeking a permanent injunction, return of ill-gotten profits and other penalties.
"Despite the defendant's alleged attempts to hide his control over these accounts, the SEC's data analytic investigative tools enabled us to determine who was behind the suspicious trading," Michele Wein Layne, Director of the SEC's Los Angeles regional office, said in a statement.
Yin was not immediately available for comment. Comcast, which folded DreamWorks Animation into its NBCUniversal media company, declined comment.
Tuesday, 10:10 a.m. This article was updated with a statement from Summitview Capital Management.