The U. S. Securities and Exchange Commission (SEC) charged German national, Eamma Safi, and Singaporean national, Zhi “Josh” Ge, for their alleged involvement in an international insider trading scheme. The SEC accused the pair of trading on material, non-public information in advance of market-moving announcements.
The SEC’s complaint, filed in the United States District Court for the District of Massachusetts, alleges Safi and Ge violated the key anti-fraud provision of the federal securities laws, namely Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder. While no securities law explicitly bars insider trading, the SEC utilizes Section 10(b) of the Exchange Act as the basis for its legal claim, reasoning that when one trades on inside information in breach of a fiduciary duty, or otherwise wrongfully misappropriates the information, it defrauds the counter-party to the trade who did not have the benefit of the same information.
The SEC’s complaint alleges that over a period of seven years, Safi obtained material nonpublic information, directly or indirectly, about impending corporate transactions or other confidential information that could move the market, such as earnings announcements. His sources of this information were insiders (including one or more sources at publicly traded companies) known to Safi or his close associates. Safi created the trading scheme by tipping Ge as well as another individual (“Trader A”) recruited by Ge, and all three traded profitably on the tips of inside information, per the SEC’s suit. The SEC further contends in its enforcement lawsuit that Safi and/or Ge also profited as they demanded and received kickbacks of trading profits from Trader A in exchange for such information.
Furthermore, the SEC contends that Safi, Ge, and other scheme participants used coded words and disappearing messages to communicate instructions and anticipated outcomes about their trading. They established “long” positions in companies that were targeted for acquisition by purchasing shares of common stock, call options, American depositary receipts, and/or contracts-for-difference. The complaint alleges trading by Safi, Ge and the other individual in advance of ten corporate announcements, and alleges they reaped over $17.5 million in illicit profits from trading in advance of the announcements.
The Commission seeks permanent injunctions against the Defendants, enjoining them from engaging in the alleged illegal transactions, acts, practices, and courses of business; disgorgement of profits realized from the unlawful insider trading, along with prejudgment interest; and civil monetary penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. § 78u-1], and for such other relief as the Court may deem just and appropriate. In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts recently unsealed criminal indictments against Safi and Ge.
Have You Been Charged with International Insider Trading?
Insider trading attorney David Chase, Esq. of the Law Firm of David R. Chase, has achieved successful results for his clients under SEC investigation for more than twenty-five years after having held the position of Senior Counsel in the Enforcement Division of the SEC. If you have received a SEC Subpoena, or are currently under SEC investigation and need strategic advice from an experienced SEC defense attorney, contact David at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. Visit the Firm’s website for valuable content and to review the firm’s prior successful SEC defense results at: www.securitiesfrauddefense.net. Representation is nationwide, including Chicago, Los Angeles, Miami or New York City.
