SEC Busts $3 Million Insider Trading Activity At Netflix By Former Software Engineer News

SEC Busts $3 Million Insider Trading Activity At Netflix By Former Software Engineer

Author's avatar Clout News Desk

Time icon August 19, 2021

The Securities and Exchange Commission (SEC) is the financial watchdog of USA. It has recently revealed that three staffers were involved in insider trading at streaming giant Netflix.

Insider Trading is completely illegal in the US. It is the practice of buying or selling shares using information that is not available in the public.

What Is Insider Trading?

For instance, you work in Netflix’s finance department and you are the person who gets to know before everyone else that this quarter had solid earnings. What would you do?

Lets say you buy shares with this ‘insider’ information before the public gets to know about the earnings report. Hence, you have traded ‘illegally’. This is known as insider trading and it is prone to criminal investigations and fines.

Who Was Involved?

A software engineer named Sung Mo Jun was the central person in this insider trading racket at Netflix. He used to pass on the confidential information of strong subscribers growth to his brother and a close associate. They used to then load up on Netflix shares ahead of the general public and profit out of it.

The SEC alleges that Sung Mo Jun has used confidential information about earnings and strong subscribers growth throughout 2016-17. Even after the software engineer left the company, he took help from two other staffers to send him the insider information.

Legal Action

The SEC Director of San Francisco office said “We allege that a Netflix employee and his close associates engaged in a long-running, multimillion dollar scheme to profit from valuable, misappropriated company information.”

Everyone involved in the activity are facing legal charges in the Western District of Washington.

How Did They Get Caught?

But now comes the big question! How on earth did SEC find out that insider trading was going on? And if you don’t know yet, there was ‘NO’ whistleblower in this case.

The financial watchdog said that their artificial intelligence system and data analysis suspected similar patterns of trading ahead of Netflix’s earnings announcement which rang the alarm.

Take lessons, everyone! Insider trading gets caught by regulators even if there is no whistleblower! At least, thats what happened with the Netflix insiders.

Author’s avatar

Clout News Desk

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