The Securities and Exchange Commission (SEC) has filed a civil suit against three former Netflix software engineers for their alleged involvement in an insider trading ring that made $3m (£2.2m).
The former staff members and two close associates were named in the court papers.
An SEC official said confidential Netflix subscriber growth data was used in the scheme, allowing traders to make profits by anticipating future earnings reports.
The SEC alleged that Sung Mo Jun, a former software engineer at Netflix, was at the centre of a long-running scheme to illegally trade shares using insider information about the company’s subscriber growth.
Sung Mo Jun, a former software engineer at Netflix was allegedly at the centre of a long-running scheme to illegally trade shares using insider information about the company’s subscriber growth.
According to the complaint, while working for Netflix in 2016 and 2017, he passed non-public information to his brother and a close friend who both used it for trading ahead of Netflix’s earnings announcements.
The SEC also alleged that after Sung Mo Jun left Netflix, he obtained confidential subscriber growth information from two other company insiders.
“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,” said Erin Schneider, director of the SEC’s San Francisco regional office.
The Securities and Exchange Commission (SEC) said it uncovered suspicious successful trading patterns using data analysis tools.
At the same time, the US Attorney’s Office for the Western District of Washington filed a criminal case against four of the defendants, which could lead to prison sentences.
Insider trading is an illegal act that can give individuals unfair advantages by allowing them to buy or sell a company’s shares based on information not available publicly.
The word “insider” can have a broad meaning. Not only does this include people with direct access to confidential information, but those that they share it with as well – and who make trading decisions based on what is shared.
