SAN FRANCISCO — The managing partner of Canyon Bridge Capital Partners, an investment firm funded in part by China's central government, has been charged with insider trading in connection with the firm's failed bid to acquire chip vendor Lattice Semiconductor.
Benjamin Chow could face up to 30 years in prison and a fine of up to $5 million after being charged with 13 counts of securities fraud and one count of conspiracy to commit securities fraud, according to a statement released by the U.S. Attorney's Office for the Southern District of New York.
Authorities accuse Chow of tipping off a friend about the potential acquisition by Canyon Bridge of Lattice prior to that information being made public. The friend — identified only as a partner at a private equity firm based in Hong Kong — used information supplied by Chow to make stock trades that netted about $5 million in profits, according to the allegations contained in the indictment filed in federal court in Manhattan.
A spokesman for Canyon Bridge said, "We are aware of the indictment charging Mr. Chow with violations of US securities laws. Mr. Chow’s Counsel has stated that Mr. Chow denies the allegations of the indictment and that he intends to defend the case in a court of law."
While the U.S. Attorney's Office did not name Chow's alleged co-conspirator, the U.S. Securities and Exchange Commission in February charged Michael Yin, a Hong Kong based partner at Summitview Capital, with insider trading in connection with the Lattice deal.
Canyon Bridge announced last November a deal to acquire Lattice for $1.3 billion. However, the deal underwent a lengthy national security review by the Committee for Foreign Investment in the U.S. (CFIUS) amid concern about Chinese entities buying Western technology firms by first the Obama administration and then the Trump administration. Trump ultimately blocked the deal in September on the recommendation of CFIUS.
Canyon Bridge, which is headquartered in Palo Alto, Calif., has since announced a deal to acquire U.K.-based Imagination Technologies for $675 million. On Tuesday (Oct. 31), Imagination announced that shareholders voted to agree to the takeover by Canyon Bridge. A court hearing to approve the deal is scheduled for next week.
"Chow’s illegal tips resulted in multimillion-dollar profits for his friend and business associate," said Joon H. Kim, the acting U.S. Attorney for the Southern District of New York, in a press statement.
—Dylan McGrath is the editor-in-chief of EE Times.