July 22, 2020

SEC settles claims with cousins accused of insider trading

On July 21, 2020, the US Securities and Exchange Commission reached separate settlements with Edmond Leung and his cousin Joseph Zhang, for allegations of insider trading related to trades Zhang allegedly made based on a tip from Leung who worked as an IT manager at Sangamo Therapeutics, a biotech company, during the relevant period.  Both orders state that on the morning of May 10, 2017, Leung obtained material, nonpublic information related his employer’s upcoming collaboration with another pharmaceutical company.  After learning of the collaboration, Leung called Zhang and encouraged him to buy Sangamo stock right away, and Zhang purchased 16,900 shares of Sangamo stock with a $60,000 home equity line of credit that he had transferred to his brokerage account the month before.  Later that day, Sangamo announced its collaboration with another pharmaceutical company to develop a gene therapy for hemophilia, causing the stock price to rise almost 60 percent.   Zhang allegedly made a profit of $66,703 after he sold his entire position in the days following the announcement.

Leong was also accused of insider trading for his sale of 1,439 shares of Sangamo common stock in August of 2016, based on material nonpublic information he obtained while employed with Sangamo.  Leung sold his shares of Sangamo common stock after learning that the certain gene therapy clinical trials would be delayed, hours before the company announced the delays.  According to the order, the price of Sangamo’s common stock decreased by almost 33 percent following the announcement, causing Leung to avoid losses of $2,863.

SEC Order – Zhang | SEC Order – Leung