SEC Charges Cheetah Mobile CEO With Insider Trading
September 21 2022 - 9:52AM
Dow Jones News
By Dean Seal
The chief executive of Cheetah Mobile Inc., along with its
former president, have been fined by federal regulators for
allegedly committing insider trading while using popular but
controversial executive stock trading plans.
The U.S. Securities and Exchange Commission said Wednesday that
it has reached settlements with Cheetah Chief Executive Officer
Sheng Fu and Ming Xu, the company's former president and chief
technology officer, for allegedly selling Cheetah's American
depositary shares after learning of a major shortfall in
advertising revenue from the company's largest advertising
partner.
Without admitting or denying the allegations, Mr. Fu agreed to
pay more than half a million dollars in fines while Mr. Xu agreed
to pay just over $200,000, the SEC said.
The trading allegedly occurred in 2015 and was done pursuant to
so-called 10b5-1 plans, which allow executives to schedule their
stock trading in advance and theoretically avoid allegations that
they traded on confidential company information.
Researchers have said in recent years that the plans haven't
been effective in mitigating insider trading. The SEC has made
moves in the past year to curb potential abuses.
"While trading pursuant to 10b5-1 plans can shield employees
from insider trading liability under certain circumstances, these
executives' plan did not comply with the securities laws because
they were in possession of material nonpublic information when they
entered into it," said Joseph Sansone, head of the enforcement
division's market abuse unit.
Cheetah Mobile is a Beijing-based mobile internet company. Its
shares were down 3% to $2.82 in premarket trading.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
September 21, 2022 09:37 ET (13:37 GMT)
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