Closing the Dow Jones Insider Trading Case

The hottest stock tip of the year turned out to be the most expensive one, too. It cost more than $24 million.

Closing out a particularly high-profile insider-trading case, David Li, a director of Dow Jones & Co., agreed to pay $8.1 million to settle a civil suit filed by the Securities and Exchange Commission. He neither admitted nor denied the allegations.

In its complaint, the S.E.C. accused Li of having tipped "his close friend and business associate," Michael Leung, about News Corp.'s offer for Dow Jones in April 2007. Over the next two weeks, Leung bought a total of 415,000 shares of Dow Jones stock for under $40 each.

News of the offer broke on May 1 and Dow Jones stock rocketed to more than $57. On May 3, Leung sold all of his Dow Jones holdings, pocketing a virtually risk-free profit of $8,121,335.

Leung's son-in-law made $40,076 on the sale of 2,200 shares. All of both men's transactions were funneled through the son-in-law's account.

In settling the case against him, Leung agreed to give up the $8.1 million profit and to pay an additional $8.1 million in penalties and prejudgment interest.

His son-in-law, K.K. Wong, agreed to pay $40,000 in disgorgement and a $40,000 civil penalty.

by Mark Stein

_{Photograph of David Li by Samantha Sin/AFP/Getty Images}