The SEC’s complaint alleges that Fei Yan loaded up on stocks and options in advance of two corporate acquisitions late last year based on confidential information obtained from his wife, an associate at a law firm that worked on the deals.
Fei Yan Faces Insider Trader Charges
On July 12, 2017, the Securities and Exchange Commission (“SEC”) announced insider trading charges against Fei Yan, a research scientist, who allegedly searched the internet for “how sec detect unusual trade” before making a trade that the agency flagged as suspicious through data analysis.
According to the SEC’s complaint, Fei Yan made approximately $120,000 in illicit profits by selling his holdings in Mattress Firm Holding Corp. and Stillwater Mining Company following public announcements that they would be acquired by other companies.
Yan allegedly attempted to conceal his illegal activity by placing the illicit trades in a brokerage account bearing the name of his mother, who lives in China. Among the internet searches he conducted was “insider trading in an international account.”
Joseph G. Sansone, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit, said, “As alleged in our complaint, Fei Yan attempted to evade detection by researching prior SEC cases against insider traders and using a brokerage account in a different name, but we identified the profitable trades in deals advised by the same law firm and traced them back to him.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Fei Yan.
The SEC’s complaint charges Yan with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3. The SEC is seeking disgorgement of ill-gotten gains plus interest and penalties as well as permanent injunctions. The SEC’s complaint names Yan’s mother Rongxia Wu as a relief defendant for the purposes of recovering illicit profits in the brokerage account in her name.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, or [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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