SEC settles insider trading charges with Chinese executive

On April 30, 2020, the US Securities and Exchange Commission issued a cease and desist order imposing remedial sanctions on Wei Duan, a Chinese national and vice president of corporate development at Momo, Inc.  Momo is incorporated in the Cayman Islands and headquartered in Beijing; it sponsors American Depositary Shares that trade on NASDAQ, with options for these ADSs traded on the Chicago Board Options Exchange. The SEC found that, while working on the imminent acquisition of Tantan Limited and in possession of material, nonpublic information about the transaction, Duan sold 450 “out of the money” short Momo March puts in a US brokerage account.  Two weeks later, on February 2, 2018 when the acquisition was announced publicly, Duan realized over $60,000 in profit.  

According to the SEC, Duan’s conduct violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Pursuant to the settlement, Duan must cease and desist from committing or causing future violations of these provisions, and must, in addition, pay disgorgement of $60,005.70, prejudgment interest of $6,548.27, and a civil money penalty equal to the disgorgement amount.

SEC Order

 
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