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 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 that 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 two 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.
“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 percent 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 percent.
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.
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.