Three Former Netflix Employees Indicted For Trading Confidential Company Information

Netflix, feels wronged by its former employees. (photo: Juraj Gabriel / Unsplash.)

JAKARTA - US regulators recently charged three former Netflix engineers and two of their close associates with insider trading that generated more than $3 million in profits.

According to a Securities and Exchange Commission (SEC) complaint, the group violated anti-fraud provisions by trading classified information about Netflix's growing subscribers.

"We allege that a Netflix employee and his close associates were involved in a long-running multimillion-dollar scheme to profit from valuable and misappropriated company information," said Erin E. Schneider, director of the SEC's San Francisco Regional Office. , August 19.

A complaint filed in federal court in Seattle, USA says Sung Mo "Jay" Jun illegally traded in non-public information about the streaming giant's growing subscriber base.

While working at Netflix in 2016 and 2017, Sung Mo Jun is suspected of repeatedly providing subscriber growth information to his brother, Joon Jun, and his close friend Junwoo Chon. The two used the data to trade ahead of Netflix's 13th earnings announcement.

After Sung Mo Jun left Netflix in 2017, he was still able to obtain confidential subscriber growth information from another Netflix employee, Ayden Lee. The SEC complaint further states that Sung Mo Jun allegedly trafficked himself and notified Joon Jun and Chon prior to Netflix's earnings announcements from 2017 to 2019.

"The allegations announced today hold each of them accountable for their role in the scheme," Schneider said.

Furthermore, the SEC also alleged that Sung Mo Jun's former colleague Jae Hyeon Bae, another Netflix engineer, provided information about Netflix subscriber growth to Joon Jun prior to the company's earnings announcement in July 2019.

Reported by NDTV, Joseph Sansone of the SEC's Market Abuse Unit said Sung Mo Jun, Joon Jun and Chon tried to avoid their actions from being discovered by using encrypted messaging apps and paying bribes. They made a total profit of around US$3 million from the illegal scheme.

"This case reflects the use of advanced analytical tools, we will continue to detect, uncover and stop a damaging insider trading scheme involving multiple informants, traders and market events," said Sansone.

The SEC complaint alleges Sung Mo Jun, Joon Mo Jun, Chon, Lee and Bae violated the antifraud provisions of the Securities Exchange Act of 1934. The U.S. Attorney's Office for the Western District of Washington has also filed criminal information against Sung Mo Jun, Joon Jun, Chon and Lee.