The Securities and Exchange Commission (SEC) detected and stopped a Netflix insider trading ring that made more than three million in illegal profits.
On Wednesday, the federal securities regulator said charges have been filed against three former software engineers at Netflix (NASDAQ: NFLX) and their two close associates for illegally trading on confidential information about the company’s subscriber growth.
The SEC identified the defendants as former Sung Mo “Jay” Jun, Aydeen Lee, Jay Hyeon Bae. They previously worked as software engineers at Netflix. The two other defendants are Joon Mo Jun and Junwoo Chon.
In the complaint, the Commission alleged that Sung Mo Jun was at the center of the Netflix insider trading scheme while he was working at the company and after he left. He allegedly obtained material nonpublic information about Netflix’s subscriber growth before the company’s quarterly earnings announcements.
Sung Mo allegedly passed the information to his brother Joon Mo, his close friend Chon to trade Netflix securities prior to the company’s quarterly earnings announcements between July 2016 and April 2017. They made substantial profits trading Netflix securities based on that information. Chon allegedly paid Sung Mo $60,000 in cash.