SEC: Taiwanese Investor Violated Order : Claims Lee Tried to Send Profit Abroad, Seeks Contempt Ruling
The Securities and Exchange Commission has accused a Taiwanese businessman of violating a U.S. court order by trying to transfer profits from illegal insider trading out of the country.
In a court hearing on Tuesday, the SEC asked U.S. District Judge Richard Owen to hold businessman Fred C. Lee, 38, in contempt of court. The SEC last month accused Lee of making at least $19 million in illegal profits from inside information obtained from a trainee analyst in the mergers and acquisitions department of Morgan Stanley & Co.
The SEC’s court papers said, “Lee has been busy trying to make a getaway with his loot.”
Lee’s whereabouts are unknown, although he is believed to be in the Far East. No lawyer appeared to represent him at Tuesday’s court hearing.
The SEC also charged that Lee had tried and failed to get inside information from a trainee analyst at another investment banking firm, First Boston Corp. The court papers said the First Boston employee refused the Taiwanese businessman’s request.
In its request to have Lee held in contempt, the SEC accused the businessman of violating a temporary restraining order issued June 27 barring him from trying to transfer money out of a series of U.S. bank accounts. The money allegedly is the profit from trading in stocks and options based on information about pending corporate mergers and tender offers leaked to Lee by Stephen Sui-Kuan Wang Jr., the former Morgan Stanley trainee analyst.
Hearing Planned
The SEC charged that Lee violated the court order on July 7 by trying to withdraw several million dollars from bank accounts at Standard Chartered Bank in New York. The SEC said Lee tried to make the withdrawal by having a Hong Kong lawyer deliver a letter of instructions to a Hong Kong office of the bank. It couldn’t be learned late Tuesday whether any of the money was actually transferred.
Judge Owen on Tuesday issued an order directing Lee to withdraw the bank letter. The judge said he would hold a hearing later on whether Lee was guilty of contempt. But the judge said, without elaborating, “As I understand it, Mr. Lee is never going to appear.” The SEC is asking the judge to impose a $100,000 fine for each day that Lee fails to comply with the court’s original order.
Court papers disclosed that Wang invoked the Fifth Amendment and refused to testify July 1 in an SEC deposition. His lawyer, Ira Sorkin, said in court Tuesday that there is “no evidence that Mr. Wang gave market sensitive information to Mr. Lee.”
A First Boston spokesman said a trainee analyst, Henry D. C. Lee, 23, who is no relation to Fred C. Lee, was approached by Fred C. Lee during a social gathering during the 1987 Christmas holidays. The spokesman said Henry Lee rejected the solicitation.
