US regulators on Wednesday filed insider trading charges against five people, including three former Netflix employees, accusing them of illegally using confidential subscriber growth data at the streaming television giant.
The Securities and Exchange Commission said the group generated $3 million in total profits from trading on inside information owned by three former Netflix software engineers.
“We allege that a Netflix employee and his closest associates were involved in a long-running multimillion-dollar plan to profit from valuable, misappropriated company information,” said Erin Schneider, director of the SEC’s San Francisco Regional Office.
Joseph Sansone of the SEC’s Market Abuse Unit said the group tried to evade detection by using encrypted messaging applications and paying bribes.
“This case reflects our continued use of advanced analytical tools to detect, unravel and stop malicious insider trading involving multiple tippers, traders and market events,” Sansone said in a statement.
According to the SEC’s complaint, Sung Mo “Jay” Jun was at the center of a long-running plan to illegally trade non-public information while employed by Netflix in 2016 and 2017.
Jun revealed this information to his brother, Joon Mo Jun, and a friend, Junwoo Chon, who both used it to trade ahead of multiple Netflix revenue announcements.
After Jun left Netflix in 2017, according to the SEC, he received confidential information about Netflix subscriber growth from another Netflix insider, Ayden Lee.
The SEC alleged that Sung Mo Jun’s former Netflix colleague Jae Hyeon Bae, another Netflix engineer, had provided the insider subscriber growth information ahead of Netflix’s July 2019 earnings announcement.
The agency said the five have agreed to a court settlement, which would restrain them from further violations and impose indefinite civil penalties.
Separate charges were filed by the US Attorney’s Office against Sung Mo Jun, Joon Jun, Chon and Lee, officials said.
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