3 Former Netflix Employees Accused of Insider Trading Scheme
Written by SOURCE on August 19, 2021
The Securities and Exchange Commission announced Wednesday that three former Netflix employees and two close associates have been charged with using confidential information pertaining to the streaming service’s subscriber growth to net a profit of $3.1 million, Variety reports.
Sung Mo “Jay” Jun, 49, has been identified in the SEC complaint at the center of insider trading scheme which allegedly started when he was working for Netflix. Jun is accused of providing his brother, Joon Mo Jun, and close friend, Junwoo Chon, with classified information through a messaging channel known as “Rage Against the Market,” ahead of over a dozen of the streamer’s earnings announcements. In turn, Jun was allegedly paid $60,000 for tipping them off.
After he left the company in 2017, Jun allegedly started trading himself and continued to obtain secretive information through fellow Netflix software engineer, Ayden Lee, and passing along what he learned to Joon and Chon. Over a two-year span, Jun made $453,000, Joon netted $813,000, and Chon received $1.1 million in profits.
Joon later got a third Netflix employee, Jae Hyeon Bae, involved in their trading scheme. Bae most notably warned Joon that Netflix’s subscriber growth would fall below analysts’ forecast prior to a July 2019 earnings announcement, which resulted in him making $72,875 from selling off his shares.
All five people have been charged by the SEC with insider trading, and have agreed to plead guilty, waiving their right to a trial, and will face a civil judgment that will determine their punishment.
