Canyon Bridge Capital Partners managing director Benjamin Chow was charged Monday with insider trading related to the attempted purchase of Lattice Semiconductor Corp.
Canyon Bridge Acquisition Co., an affiliate of Canyon Bridge, agreed in November 2016 to acquire all outstanding shares of Lattice for approximately $1.3 billion, but the purchase was blocked in September by President Donald Trump over concerns that some of the private equity firm’s Chinese investors pose a national security issue.
The indictment was filed in U.S. District Court in New York by Acting U.S. Attorney Joon Kim and Danny Kennedy, the acting director of the FBI’s Los Angeles office. The Securities and Exchange Commission assisted with the investigation.
Mr. Kim said in a statement that the charges allege Mr. Chow “tipped his friend about a potential acquisition of Lattice Semiconductor Corp. by private equity firms he managed, including one based in China. Chow’s illegal tips resulted in multimillion-dollar profits for his friend and business associate.”
The joint statement from Messrs. Kim and Kennedy noted the allegations “are merely accusations, and the defendant is presumed innocent unless and until proven guilty.”
In an emailed statement, a Canyon Bridge spokesman said the firm is aware of the indictment, and that Mr. Chow’s counsel, George Canellos of Milbank, Tweed, Hadley & McCloy LLP, “has stated that Mr. Chow denies the allegations of the indictment and that he intends to defend the case in a court of law.”
The indictment alleges that the insider-trading activity took place from March to November 2016, with Mr. Chow providing a friend and business associate with material non-public information relating to a potential merger between Lattice and two related private equity firms managed by Mr. Chow based in Beijing and Palo Alto, Calif. That friend used the information to make at least $5 million in profitable securities trades through accounts opened in the names of family members and associates, the indictment alleged.
As managing director of one firm and managing partner of another, Mr. Chow obtained material non-public information regarding the Lattice acquisitions that was subject to non-disclosure agreements, the indictment said.
Mr. Chow is charged with one count of conspiring to commit securities fraud, which carries a maximum prison sentence of five years, and 13 counts of securities fraud, which carry maximum sentences of between 20 and 25 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.