Dow Jones & Co. Inc. board member David Li, a prominent Hong Kong banker, may face civil charges in a U.S. Securities and Exchange Commission insider trading investigation linked to News Corp.'s $5 billion bid for the U.S. media company.

Li, who is chairman and chief executive officer of Bank of East Asia, denied on Thursday any wrongdoing.

I have broken no laws and deny the apparent allegations being made by the staff of the Commission. If the Commission does commence proceedings against me, I will defend myself vigorously, Li, 68, said in a statement issued by the bank.

The SEC's notice to Li comes at critical moment for Dow Jones, which on Tuesday endorsed the $60 a share buyout offer from News Corp. Chairman and Chief Executive Rupert Murdoch. The board's approval sends the deal to Dow Jones' controlling Bancroft family for final approval.

Bank of East Asia said on Thursday in Hong Kong that Li received a so-called Wells notice indicating that the SEC was considering recommending a civil enforcement action against him for alleged breaches of U.S. securities laws.

A Wells notice gives a company or individual a final chance to convince the SEC not to file charges. It would be the last step before the SEC files suit against Li.

One of Asia's best-known bankers, Li is well-connected in both Hong Kong and mainland China. He is a member of Hong Kong's Legislative Council and accustomed to rubbing elbows with prominent figures on the various boards on which he serves.

I will continue to carry out all my business and public duties while defending my good name and reputation, said Li, whose stake in Bank of East Asia is worth about $178 million.

A Dow Jones spokesman in Hong Kong, Joe Spitzer, said the company's board had not been investigating Li and declined further comment.

UNUSUAL TRADING

The SEC and the New York State attorney general have been looking into unusual trading in Dow Jones stock and options in the weeks before the company disclosed the $60 per share buyout offer from News Corp. on May 1.

Securities market experts said the news was embarrassing for Li and Dow Jones, and reflects the SEC's stepped-up action against insider trading.

There is a real concern I think about non-U.S. persons taking advantage of U.S. capital markets for fraud, said Keir Gumbs, securities lawyer with Covington & Burling LLP.

Shares in Bank of East Asia, a mid-tier lender known for its extensive mainland China franchise, fell about 2.4 percent before closing down by 1.2 percent on Thursday, lagging the 0.76 percent rise in the Hang Seng Index, of which it is a constituent.

Analysts said the news dampened sentiment towards the stock but was unlikely to have any impact on the bank, which is controlled by the Li family.

Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, did not expect the probe to have a great impact on Murdoch's offer.

Any time the SEC proceeds against a director, it's bad for the director and obviously embarrassing for the company, Elson said.

The timing isn't particularly good, but ... the transaction itself that's being recommended is really unaffected by this, he added, referring to the News Corp. deal.

HONG KONG COUPLE

The SEC said on May 8 that a Hong Kong-based couple, Kan King Wong and Charlotte Ka On Wong Leung, engaged in widespread and unlawful trading activity that put them in a position to make an estimated $8.1 million profit on Dow Jones shares.

The Wall Street Journal reported in May that the SEC was expected to pursue a connection between the couple and Li. The paper said Li and Charlotte Leung's father, Michael Leung, share a history of business and social dealings. Michael Leung has not been charged in the case.

Li was born in London to one of Hong Kong's most prominent families and was educated at Cambridge. His grandfather co-founded Bank of East Asia in 1918. Li's brother, Arthur Li, was Hong Kong's secretary of education until last month. Their cousin, Andrew Li, is chief justice of Hong Kong's highest court.

He's a legislator, an executive councilor and the head of the Bank of East Asia, so he's well-respected, said Chim Pui-chung, a Hong Kong legislator representing the financial services sector, who has known David Li for years.

He said Li, known for being outspoken and keeping a hectic schedule, had no reason to enrich himself unlawfully.

Sometimes he's a very straightforward guy who says what he feels and thinks. But he's very rich and a tycoon's son so in some sense, he doesn't need to make money through devious means, Chim said.

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