The Wall Street Watchdog has charged three Netflix engineers. They are facing charges over an insider trading ring that has made $3m. The Ex- staff members with two close associates have names in the court papers.
The US Securities and Exchange Commission has said that they have used the confidential Netflix subscriber growth data in the scheme. They have used the information allegedly to trade the shares of the streaming giant ahead of the earnings reports.
SEC has also alleged one of the former Netflix engineers Sung-Mo Jun was at the center of this long-running scheme. It trades illegally to share insider information about the growth of the company’s subscribers.
While working with Netflix, he repeatedly passed non-public information to this friend and brother. They used the information to trade ahead of the multiple of the earnings announcement for Netflix.
SEC also alleged that after leaving Netflix, he obtained some confidential information on subscriber growth from two other companies.
SEC said that it had uncovered this scheme with analytics tools. They have found the successful patterns of this trading. Also, the US Attorney’s Office for the Western District of Washington has filed a criminal case against these four defendants. It can lead them to have prison sentences.
Insider trading works as a buying and selling system for the share of listed companies or other securities. It also includes the trading of bonds or the share options based on information that is not available to the public.
In many countries like the UK, US insider trading is illegal. It gives an unfair advantage with the access to classified information. But the rules and penalties differ around the globe. However, in many jurisdictions, a person who is familiar with non-public information and trades can become subject to penalty. Also, he/she might face criminal prosecution.
The meaning of insider can be broad. It can also cover not only the people who have direct access to information but also those entities with whom they share it.
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