Three former Netflix (NASDAQ:NFLX) software engineers and two associates have been charged with insider trading by the U.S. Securities and Exchange Commission (SEC).
The Wall Street regulator says the former Netflix employees earned $3 million U.S. by trading on confidential information about the company’s subscriber growth.
Sung Mo Jun, while employed at Netflix in 2016 and 2017, repeatedly tipped non-public subscriber information to his brother, Joon Mo Jun, and his friend, Junwoo Chon, who used it to trade in advance of multiple Netflix earnings announcements, according to the SEC charges.
After Sung Mo Jun left Netflix in 2017, he obtained the same subscriber growth information from another Netflix employee, Ayden Lee, according to the regulator.
Jun, his brother and friend Chon used encrypted messages to discuss their trading in an attempt to evade detection. The group traded ahead of 13 Netflix quarterly earnings announcements between 2016 and 2019, according to the SEC.
Federal prosecutors in Seattle filed criminal securities fraud charges against the defendants named in the SEC complaint. The criminal case was filed in a charging document called "an information," which is typically used when defendants have agreed to plead guilty.
The criminal charges rely on the same conduct outlined in the SEC complaint, alleging the subscriber data gleaned through their work as Netflix software engineers was used to inform trades in the company’s stock that netted millions in illicit gains.
