SEC investigates dow jones/bank of east asia board member

LOSSES & LAWSUITS

According to wire service reports, US securities regulators have told Li they intend to file a civil complaint against him, in a suspected case of insider trading stemming from the takeover bid for Dow Jones by News Corp.

Li has been on the Dow Jones board since 1993, and is chairman and chief executive of the Bank of East Asia, the largest local bank in Hong Kong. He is linked indirectly to a couple who turned an $8.2 million profit in a matter of days with Dow Jones stock, just before the takeover offer became public. One of the couple's parents had business links to Li, and transactions surrounding the financing of the purchase have raised eyebrows.

The SEC has served a Wells Notice on Li – formal notification that it plans to bring a case against him. Li denies the allegations.

The banking authorities in Hong Kong said they are taking a strong interest in the investigation into Li, whose family has a controlling interest in the Bank of East Asia, which is publicly traded on the Hong Kong stock exchange. Analysts said that any finding against Li could raise questions over whether he meets the 'fit and proper' test of the Hong Kong Monetary Authority for senior executives and directors of banks.

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