Sir David Li, the London-born business grandee who was on the board of Dow Jones, tipped off a friend about the company's secret bid approach from Rupert Murdoch while the pair shared a business-class flight to Shanghai, it was alleged yesterday.
Sir David agreed to pay $8.1m (£4.1m) to settle insider dealing charges laid against him yesterday afternoon by the US Securities & Exchange Commission, in which it was claimed he travelled with his close friend Michael Leung on 13 April last year, one day after Dow Jones's legal counsel had told him about the $5bn bid.
Mr Leung began buying Dow Jones shares immediately after the pair had landed in Shanghai, using the brokerage accounts of his daughter and son-in-law. Negotiations between Mr Murdoch and Dow Jones, parent company of The Wall Street Journal, remained secret for several more weeks before leaking and sending Dow Jones shares soaring. Sir David and Mr Leung spoke repeatedly during that period, the SEC said.
Mr Leung has agreed to pay back the $8.1m profit he made on the trades and will also pay an $8.1m penalty. None of the four people involved admitted or denied wrongdoing in yesterday's settlement.
Sir David, who was knighted for his services to British education, is now a prominent Hong Kong-based businessman and chief executive of the Bank of East Asia. He will not be barred from serving as a director.
The SEC said its $24m settlement proved it was capable of taking on cases of alleged insider trading, even when they spanned international borders.
The regulator's chairman, Christopher Cox, said: "This case makes clear that the SEC will move fast and decisively, not only in the United States but around the world, to protect investors from insider dealings and threats to fair and open markets."
The case was the largest investigated last year by the SEC, based on the value of the alleged trades.