The U.S. Securities and Exchange Commission (SEC) secured a final consent judgment against Andre Wong, a former employee of Lumentum Holdings, Inc., for engaging in illegal insider trading. While the facts of the underlying insider trading are not unique, the severity of the civil penalty imposed was, no doubt intended to send a strong message of deterrence to those tempted to make a quick buck on inside information and then cover it up.
The SEC’s complaint, filed in U. S. District Court for the Southern District of New York, charges Wong with fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. On a neither admit nor deny basis as to the SEC’s allegations, Wong consented to the entry of the final judgment.
Specifically, the SEC alleged in its enforcement action that Wong, while a vice-president of product line management at Lumentum, learned from a work colleague that Lumentum planned to acquire NeoPhotonics, a competitor. While in possession of this material, non-public information about the impending acquisition, Wong purchased 10,000 shares of NeoPhotonics. When the acquisition was publicly announced, NeoPhotonics’ stock price soared by approximately 39% providing Wong around $62,000 in alleged illicit profits.
Several months after his sale of NeoPhotonics’ stock, Wong was visited by FBI agents who confronted him about his trading. Per the SEC’s allegations, Wong falsely denied prior knowledge of the acquisition during the interview. Making matters worse, after the interview he fabricated text messages in an attempt to conceal what he, in truth, knew about the acquisition.
The final judgment permanently enjoins Wong from future violations of the charged anti-fraud violation, bars him from serving as an officer or director of a public company for five years, and orders him to disgorge his illicit profits of $62,574, along with prejudgment interest, and pay a civil penalty of $93,861. The civil penalty, which is more than the SEC typically seeks in its standard insider trading settlements, presumably reflects the SEC’s disdain not only for the alleged underlying insider trading but also, and perhaps more importantly, Wong’s attempts to cover it up after-the-fact.
Are You Facing an SEC Insider Trading Charge?
For the last twenty-five years, SEC defense attorney David Chase has represented individuals in SEC insider trading investigations around the country after having worked as an attorney in the SEC’s Enforcement Division. If you are under SEC investigation for insider trading and need strategic legal advice, contact David, an insider trading attorney, at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. Visit the Firm’s website for information on the firm’s prior successful results for its clients in SEC investigations at: www.securitiesfrauddefense.net.
