It appears Netflix’s rare internal transparency regarding its finances may have been abused by three former employees. According to Deadline, three former software engineers are facing charges of alleged insider trading. The complaint, filed by the U.S. Securities and Exchanges Commission, alleges former employee, Sung Mo “Jay” Jun, was the ringleader in a multi-year scheme.
“We allege that a Netflix employee and his close associates engaged in a long-running, multimillion-dollar scheme to profit from valuable, misappropriated company information,” Erin E. Schneider, director of the SEC’s San Francisco office, stated in a press release via Deadline. “The charges announced today hold each of the participants accountable for their roles in the scheme,” Schneider continued.
Deadline reports Sung Mo Jun was employed at the streaming platform between 2016 and 2017. During that year period, the complaint alleges the software engineer shared secret information pertaining to Netflix’s subscription growth rates with two outside sources: his brother Joon Mo Jun, and friend, Junwoo Chon. Joon Jun and Chon allegedly used the tips to profit ahead of marketing announcements by the company.
Once Sung Jun departed the company, Deadline reports the complaint alleges he recruited two other software engineers to continue the alleged unlawful acts. Ayden Lee allegedly assisted in leaking information to Sung Jun, who continued to trade and use the tips to his advantage. By 2019, a third software engineer, Jae Hyeon Bae, allegedly funneled Sung Jun information. As of July 2019, the three-year ordeal accumulated more than $3 million dollars.
According to Deadline, the SEC was able to catch the alleged culprits through its market abuse unit led by the unit chief, Joseph Sansone. Through specific data analysis, the unit tracked the unusual stock success of the three individuals. Sansone stated they foiled the trio’s alleged attempt to hide their activities through encrypted messaging apps and cash paybacks.
The SEC will work with the U.S. Attorney’s Office for the Western Washington District in filing criminal information against the four main suspects, according to Deadline. An information file simply highlights the charges being brought against a person or persons. Compared to an indictment, it does not require a jury to vote. Sung Mo Jun, Joon Jun, Chon, and Lee all consented to the judgments and await the court’s approval. All four could face civil penalties. Bae has consented to a judgment and faces a civil penalty in the amount of $72,875 dollars.