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US Securities and Exchange Commission drops insider-trading case against Luo Haijian over Qihoo 360 shares

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The US SEC reportedly ditched the case due to ‘incomplete information’. Photo: Bloomberg
The US Securities and Exchange Commission has dismissed its complaint against Luo Haijian, the chief executive of Chinese online gaming company 4399, for alleged insider trading involving shares of Qihoo 360 Technology last year.

Gabriel Colwell, Luo’s lead counsel from international law firm Squire Patton Boggs, told the South China Morning Post this week that the SEC agreed to the voluntary dismissal after finding that its complaint was “based upon incomplete information”.

The Post had reported in June about the complaint being filed in a federal court in Manhattan, where the SEC alleged that Luo made a profit of more than US$1 million after trading in a US brokerage account prior to Qihoo’s announcement of a buyout offer that would take the New York-listed company private.

An emergency court order was obtained by the SEC to freeze that brokerage account and all profits from the trades in Qihoo’s shares by Luo, a resident of Guangzhou in southern China’s Guangdong province.

“The suspicious timing and size of Luo’s trades spurred us to move swiftly to freeze his proceeds and ensure that potentially illegal profits cannot be siphoned out of this account beyond a US court’s jurisdiction while our investigation continues,” Andrew Calamari, the regional director of the SEC’s New York office, said in a statement last June.

After being retained by Luo, Squire Patton Boggs moved to expedite the pre-trial process known as discovery. This requires disclosure of information needed for the preparation of the requesting party’s case and that the other party alone has knowledge or possession.

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