SEC v. Jing Wang and Gary Yin, Case No. 3:13-cv-02270-L-WVG (S.D. Cal.).  On September 23, 2013, the SEC announced insider trading charges against former Qualcomm executive Jing Wang and his financial adviser Gary Yin for trading ahead of major announcements by Qualcomm for more than a quarter-million dollars in profits.  According to the SEC, Wang and Yin became friends and were members of the same church.  Wang asked Yin to manage his money and opened a number of brokerage accounts at Merrill Lynch’s San Diego branch office.  Wang disclosed the accounts to Qualcomm because he was an officer and was required to pre-clear all Qualcomm trades with the company.  The SEC alleges that Wang asked Yin about hiding transactions and Yin proposed that Wang form an entity in the British Virgin Islands (BVI) and use the name of a non-U.S. citizen family member as the beneficial owner.  Then he could open a brokerage account in the newly created entity’s name.  Yin then helped Wang set up the secret account and listed Wang’s older brother as the owner.  Yin created his own BVI-registered entity and put it in his mother-in-law’s name.  Yin opened a Merrill Lynch brokerage account for and used it to hide funds that he was using for investments.  According to the SEC, Wang and Yin used their secret offshore accounts to trade on inside information that Wang while working at Qualcomm.  Although he was told not to trade Qualcomm stock in advance of an announcement, he told Yin to use the money in his offshore Unicorn account to buy Qualcomm stock.  After trading for Wang, Yin bought Qualcomm stock.  After Qualcomm announced a quarterly cash dividend and stock repurchase program, both sold their stock for a profit.

The SEC also alleges that Wang used his illegal profits to trade again in the shares of Atheros Communications, which was the highly confidential target of a planned acquisition by Qualcomm.  Wang told Yin to sell all of his Qualcomm stock in the offshore account and buy shares of Atheros stock with the money.  After Wang learned the details of the deal, he bought all the Atheros shares he could purchase with the money in his account.  Yin also bought Atheros stock.  When the news became public, Atheros stock increased significantly and Yin and Wang sold their shares at a profit.  According to the SEC’s complaint, Wang turned around and engaged in insider trading a mere four minutes after selling the Atheros stock.  He took the proceeds and bought Qualcomm shares before a company announcement that it would raise its revenue and earnings guidance for the 2011 fiscal year.  After Qualcomm issued a press release to announcing its positive first quarter results, its stock increased.

The SEC charged Wang with violating Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3.  Yin is charged with violating Section 10(b) of the Exchange Act and Rule 10b-5.  The SEC seeks disgorgement, civil monetary penalties, and injunctive relief.  The SEC also seeks an officer-and-director bar against Wang.  In a parallel action, the U.S. Attorney’s Office for the Southern District of California today announced criminal charges against Wang and Yin.