After Sung Mo left Netflix, he continued to obtain in advance the company’s quarterly subscriber information from his fellow software engineer and friend Ayden Lee. From June 2017 to July 2019, Sung Mo traded Netflix securities and tipped his brother and Chon about the information before that company’s quarterly earnings announcements.
In July 2019, prior to Netflix’s quarterly earnings announcement, another insider Jay Hyeon Bae tipped Joon Jun about the company’s confidential subscriber growth using a group messaging channel.
Sung Mo, Joon Moo, and Chon generated a total of over $3.1 million in illegal profits from trading Netflix based on material, confidential information provided by insiders, according to SEC in the complaint.
SEC Market Abuse Unit used sophisticated analytical tools to detect insider trading schemes
The SEC Market Abuse Unit’s Analysis and Detection Center discovered the Netflix insider trading ring using data analysis tools.
In a statement, SEC San Francisco Regional Office Director Erin Schneider said, “We allege that a Netflix employee and his close associates engaged in a long-running, multimillion-dollar scheme to profit from valuable, misappropriated company information. The charges announced today hold each of the participants accountable for their roles in the scheme.”
