Canyon Bridge founder charged with insider trading

According to an indictment filed by the US attorney for the Southern District of New York, Benjamin Chow passed non-public information between March and November 2016 about Canyon Bridge’s potential acquisition of Lattice. The resulting trades generated a profit of at least $5 million. Chow’s lawyer said the charges against his client are baseless and unprecedented.

The private equity firm agreed to buy NASDAQ-listed Lattice in November of that year for $1.3 billion. The deal went through three 75-day review cycles with the Committee on Foreign Investment in the US (CFIUS) but there was no agreement on mitigation terms. Canyon Bridge appealed directly for presidential approval, but this resulted in a veto in September.

The indictment describes the recipient of the information as a friend and business associate of Chow who was a partner in another private equity firm, based in Hong Kong. They were former colleagues at a private investment firm where Chow was an investment manager focusing on technology, media and telecom (TMT) investments in North Asia.

The Financial Times noted that trading identified in the indictment aligns with trading laid out in a civil complaint filed by the US Securities & Exchange Commission in February against Michael Yin, a hedge fund manager at Hong Kong-based Summitview Capital Management. Chow and Yin previously both worked for Warburg Pincus, where the former covered TMT in North Asia.

The complaint against Yin was not specific to Lattice. It centers on trading in DreamWorks Animation stock in late 2015 and early 2016 around the time PAG Asia Capital submitted a bid for the company but lost out to a higher offer from Comcast. Lattice is one of several other suspicious trades, alongside 58.com, Ctrip and Giant Interactive, all of which were engaged in M&A activity.

Chow founded Canyon Bridge with three other executives in 2016. Chow previously worked at China Reform Fund Management - a PE firm sponsored by China Reform Holdings and other central state-owned enterprises – and China Reform is said to be among Canyon Bridge’s backers.

After losing out on Lattice, the GP agreed to acquire Imagination Technologies, a UK-headquartered chipmaker, at a valuation of approximately GBP550 million ($742 million).

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• Topics
• Greater China
• Buyouts
• Regulation
• North America
• China
• USA
• Canyon Bridge Capital Partners