November 21, 2022

SEC settles with New Jersey resident to resolve insider trading charges

On November 16, 2022, the US District Court for the Southern District of New York approved the proposed settlement between Securities and Exchange Commission and New Jersey resident Brian Wong to resolve insider trading charges against him. The SEC accused Brian Wong of unlawfully trading in Pandion Therapeutics securities before its impending acquisition by Merck & Co. was announced publicly.  On July 25, 2022, the SEC filed a separate but related insider trading case against Wong’s brother Brandon, who allegedly shared the material nonpublic information (“MNPI”) with Brian, and Seth Markin, Brandon’s source.

According to the SEC’s July complaint, Markin was in a romantic relationship with an attorney who was working on behalf of Merck on the Pandion acquisition and frequently worked on the deal from her apartment.  While in the attorney’s apartment, Markin secretly obtained MNPI regarding the upcoming acquisition – MNPI which he misappropriated when he purchased Pandion stock before the acquisition was announced.  According to the complaint, Markin shared the MNPI with his close friend Brandon Wong who not only purchased Pandion stock before the acquisition was announced publicly but also shared the information with his brother Brian.  Based on the MNPI, Brian Wong purchased Pandion stock using his life partner’s account before the acquisition was made public.  When Merck and Pandion announced their planned acquisition on February 25, 2021, Pandion’s stock price increased by more than 133 percent, and Brian Wong realized unlawful gains of approximately $400,000.  The SEC also alleged that, based on the MNPI, Brian Wong encouraged two other individuals to purchase Pandion stock on the day before the announcement, and those individuals allegedly generated profits of approximately $2,000.

The SEC charged Brian Wong with violating the antifraud provisions in Section 10(b) and 14(e) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5 and 14e-3. As part of the settlement with the SEC, Brian Wong consented to the entry of judgment against him and agreed to be permanently enjoined from further securities violations.  Brian Wong also agreed to pay disgorgement, prejudgment interest and civil monetary penalties, which will be determined at a later date.  According to a letter submitted by the SEC to the court in support of its proposed settlement, the SEC anticipates that the parties will address the outstanding monetary relief following Wong’s sentencing in a related criminal action, which was filed by the US Attorney’s Office for the Southern District of New York on November 10, 2022 in connection with Wong’s illegal trades.  Brian Wong pleaded guilty to one charge of assessory after the fact to conspiracy to commit securities fraud, and is currently scheduled to be sentenced on February 16, 2023.

Criminal proceedings against Brandon Wong and Seth Markin in connection with the unlawful securities trades continue.

SEC Press Release | SEC Complaint | Proposed Consent Judgment | SEC Letter in Support of Consent Judgment | SEC Docket – Minute Entry |Superseding Information| Criminal Docket – Minute Entry