October 23, 2019

Investment banker pleads guilty to insider trading, and settles with the SEC

On September 30, 2019, the US District Court for the Southern District of New York entered a final judgment against Woojae Jung, a former investment banker in New York, enjoining Jung from violating the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, and adjudging him liable for disgorgement of $130,000.

According to the SEC’s complaint, Jung obtained access to sensitive, material non-public information about upcoming transactions in which his employer, a prominent investment bank, was involved, and repeatedly used the highly confidential information to trade in securities of several companies prior to the public announcement of the transactions.  The complaint alleges that, in violation of his employer’s personal trading policy, Jung secretly opened a trading account in the name of a friend, and used that account to surreptitiously trade in advance of news of at least 12 different market-moving corporate transactions that he had learned about in the course of his employment.  Jung’s representatives admitted in the sentencing hearing that in addition to trading for his own benefit using the secret account, Jung shared material non-public information with his brother in South Korea so that the brother would benefit.  The SEC alleges that Jung gained $140,000 in profits from the illicit trades.

In a criminal action based on the same conduct, Jung was sentenced on June 10, 2019 to three months in prison, and required to pay a fine of $30,000 and forfeiture of $130,000.  The disgorgement required by the SEC is deemed satisfied by payment of the criminal forfeiture of the same amount.