SEC Charges Index Manager and Friend With Insider Trading

Washington, D.C.–(Newsfile Corp. – September 21, 2020) – The Securities and Exchange Commission today charged Yinghang “James” Yang, a senior index manager at a globally recognized index provider, and his friend Yuanbiao Chen, a manager at a sushi restaurant, with perpetrating an insider-trading scheme that generated more than $900,000 in illegal profits.

The SEC’s complaint alleges that between June and October of 2019, Yang and Chen repeatedly purchased call or put options of publicly traded companies hours before public announcements that those companies would be added to or removed from a popular stock market index that Yang helped his employer manage. When the options increased in value after the announcements, Yang and Chen allegedly liquidated their options positions for a substantial profit. As alleged in the complaint, the defendants conducted all of the illegal trading in Chen’s brokerage account, which allowed Yang to conceal his trading from his employer. The complaint alleges, for example, that a number of purchase orders were entered in Chen’s brokerage account immediately following logins from IP addresses assigned to Yang’s home address.

“Financial professionals and other employees entrusted with confidential, market-moving information are prohibited from using that information for personal gain,” said Richard R. Best, Director of the SEC’s New York Regional Office. “As alleged in our complaint, Yang abused that trust when he used the information to enrich himself and Chen. Their attempts to disguise the unlawful trades by using Chen’s account did not prevent the SEC from uncovering their scheme.”

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of New York, charges Yang and Chen with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions and civil monetary penalties.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Yang.

The SEC’s investigation has been conducted by Tian Wen, Melissa Coppola, and Sheldon Pollock of the New York Regional Office, and the litigation will be led by Alexander Vasilescu and Ms. Wen.  The case is being supervised by Sanjay Wadhwa.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation.