Not only did the Xinhua Finance deal add a spark to the moribund private equity scene, it rekindled the old “did somebody know about this deal ahead of time?” issue.

Last Wednesday, shares were trading around $5.25 (that’s down from the $13 IPO in March, by the way). The next day shares jumped to more than $6. The only announcement that week was a press release on Sept. 17 saying “Xinhua Finance Deems S&P Downgrade Unmerited.”

Yesterday, the stock closed at $7.88 and by the time the sun was up and shining this morning, alas, Xinhua Financial said Yucaipa was buying up a chunk of the company (shares are up 14 percent to $9 today). Barron’s blog pointed out the strange surge in shares earlier today.

At first blush, you’ve got to think somebody knew something. Such activity was fairly common when the buyout scene was hot.

Xinhua Finance, run by American businesswoman Fredy Bush, has taken heat from a shareholder over whether its IPO prospectus properly disclosed certain business relationships.

The Xinhua-Yucaipa story is interesting for several reasons, not the least of which is the suspicion of some sort of insider knowledge. Any deal involving Ron Burkle, founder of Yucaipa, is worthy of note. He’s a billionaire, an LA hot shot, and the son of a grocery executive who worked the check-out line in his younger days. Burkle has made a lot of headlines in the last year, including an effort to buy Tribune and a New York Post extortion case.

A front page article in the Wall Street Journal today gets to the bottom of a sour deal between Yucaipa and an Italian businessman, a deal that Bill Clinton’s main handler helped to broker.

(Photo. Forbes)