The US Securities and Exchange Commission has filed insider trading charges against Jun Ying, the ex-chief information officer of an Equifax US business unit. The regulator contends that Ying engaged in insider trading in 2007 before the consumer credit reporting agency announced that there had been a major data breach exposing personal information of approximately 148 million customers in the US. Among the information that was disclosed were social security numbers, names, addresses, and birth dates.
The Commission’s complaint accuses Yin of using confidential information to determine that Equifax had experienced a major breach. The SEC said that before the company disclosed the information breach, Ying exercised all the Equifax stock options he had vested and made almost $1M when he sold the shares. The regulator claims that Ying was able to avoid losing over $117K by selling the shares when he did.
Now, the SEC, which has filed charges against Ying accusing him of violating federal securities laws’ antifraud provisions, is pursuing ill-gotten gains, interest, injunctive relief, and penalties against him. Ying resigned from Equifax after the company found out about his trades and reportedly made plans to let him go. US prosecutors have filed a parallel criminal case against Ying.
According to US Attorney Byung J. Pak of the US Attorney’s Office for the Northern District of Georgia, Ying sold more than $950K of stock prior to the data breach announcement. He made a more than $480K gain. When Equifax told the public know about the data breach, the company’s stock price fell.
SEC Files More Insider Trading Charges
In other insider trading news, the SEC has filed charges against ex-UTi Worldwide Inc. employee Robert M. Morano. The former communications specialist is accused of using nonpublic information related to UTI’s upcoming acquisition to make his trades. As a result, claims the SEC, Morano earned over $38K in illegal profits when he bought shares in UTi prior its the announcement that it was acquiring DSV Air and Sea Holdings.
The regulator contends that Morano, who was involved in company communications, including publishing press releases, found out about the acquisition the day before the news of the deal was disclosed to the public. He bought about 17,500 UTi shares right away.
When public was told about the acquisition, UTi shares rose by more than 50%. Morano proceeded to sell all the shares he had just bought. Now, the SEC wants disgorgement, interest, an injunction, and a penalty.
In a different SEC insider trading case, former Merck & Co. Global Health Outcomes Research Director Yang Xie has agreed to pay a $6,681 civil penalty and disgorgement of $2,287 over charges that he engaged in insider trading. Xie is settling without denying or admitting to the regulator’s allegations. However, the deal must still be approved by a court.
The Commission’s complaint states that on 11/20/14, Xie got an email from a Merck lawyer about a possible merger between the company and Cubist Pharmaceutical Inc. Xie and other email recipients were advised not to trade in Cubist stock until the news of the acquisition was made public and a full trading date had passed. Still, contends the SEC, 14 minutes after receiving the email, Xie purchase 80 shares of Cubist stock.
In 2015, one day after the tender offer was fulfilled, Xie sold his shares. The penalty he is now ordered to pay is three times greater than the illegal trading profits he allegedly made.
The SSEK Partners Group is a securities fraud law firm. We represent institutional clients and high net worth investors. Contact one of our securities lawyers today to request your free case consultation.
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Royal Bank of Scotland Settles NY’s RMBS Fraud Case for $500M, Institutional Investor Securities Blog, March 9, 2018
BitConnect Shutters Its Lending and Exchange Operation, Leaving Texas Investors With No Place to Trade Their BCC Currency, Stockbroker Fraud Blog, January 17, 2018
FINRA Warns About Cryptocurrency Related-Fraud, Stockbroker Fraud Blog, December 22, 2017