Trading Scheme Greed Run Rampant

The Securities and Exchange Commission charges an employee of a prominent investment bank. The charges are a result of repeatedly leveraging highly confidential information to place illicit and profitable trades. Moreover, the illegal trading scheme is in advance of deals for which the bank provides investment banking advisory services. 

According to the SEC’s complaint, Woojae “Steve” Jung, is a Vice President of Investment Banking. Jung’s tenure at the bank includes the firm’s San Francisco and New York offices. During his employment, Jung uses sensitive client information to make securities trades for twelve different companies, prior to the announcement of market-moving events.  Specifically, the SEC alleges that between 2015 and 2017, Jung uses a brokerage account held in the name of a friend living in South Korea to place the illegal trades. In doing so, Jung generates profits of approximately $140,000. The bigger problem for Jung, however, is that the circumvention of his employer’s and SEC’s requirements are illegal.  Jung knows that he must pre-clear his trades using an appropriate brokerage firm that reports the trading to his employer. Jung realizes that if he follows the rules, he is unable to profit from his illegal scheme.

The Power of Data Analysis

“Jung tried to insulate himself by allegedly placing trades in the brokerage account of a friend who lived overseas,” said Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit.  “Like others before him, Jung’s alleged scheme failed when our data analysis uncovered the account’s suspicious trading pattern and, despite Jung’s attempts at evasion, traced the trading back to him.”   

The SEC’s complaint charges Jung with fraud and seeks disgorgement of allegedly ill-gotten gains, pre-judgment interest, penalties, and injunctive relief.  The complaint also names Jung’s friend, Sungrok Hwang, as a relief defendant. Accordingly, Hwang must disgorge illicit gains that Jung generated trading in his overseas brokerage account.  To complicate matters, the U.S. Attorney’s Office for the Southern District of New York also files criminal charges against Jung.