Technology

SEC accuses Netflix engineers of trading inside info

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Netflix engineers accused of insider trading by the SEC, including growing Netflix subscribers, are now under investigation after it was discovered that three of its former engineers were involved in a long-standing insider trading scheme.

The three engineers are two close employees who allegedly exchanged confidential company information, mainly about the growth rate of Netflix subscribers.

The trade brings in over $ 3 million in profit. Song Mo “Jay” Joon allegedly provided the streaming company’s subscriber information to his brother Jun Mo Joon. And his friend Jun-woo Jung from 2016 to 2017. Jeon used this information to pre-reconcile Netflix’s earnings reports.

After Sungmo Jun left the company in 2017, he received confidential information about Netflix subscriber growth from his friend Aiden Lee. Another Netflix insider and colleague of fellow Netflix engineer, Jae Hyun Bae. Users will use encrypted messaging apps to discuss their business plans and avoid detection.

The Securities and Exchange Commission says the agency’s anti-market abuse department ultimately marked the group’s business plan. From 2016 to 2019, Netflix grew rapidly as its shares tripled. From 2012 to 2018, he added 5 million subscribers a year.

Netflix Engineers on the trading team

The business problem arose shortly after Netflix announced that it was planning to enter the gaming industry and is currently doing it. In July, Netflix announced the possibility of joining Sony to follow the game plan. The deadline advises that providing employees with access to company information that may be considered confidential is part of the company’s strategy.

The philosophy of founder Reed Hastings in No Rules, Rules, published last year, Hastings said he knew it was the only public company to share its financial results. He believes it is a motivation tool for workers. Within the company just a few weeks before the end of the quarter.

Hastings wrote that the financial world considers this strategy reckless, but the information “has not been leaked.” He also said he expects insider information to leak one day but is confident that they will not “overreact” and simply face it and remain transparent.

Insider trading

Netflix isn’t the only company the SEC has investigated and sued this week. On August 18, the agency charged a biopharmaceutical executive with illegal trading in competitors’ shares before the merger. Researchers call this measure “shadow trade.”

Reuters reported that the lawsuit alleges that Matthew Panuwat, the former head of business development at Medivation Inc., knew that Pfizer was planning to acquire the company in 2016.

By buying call options on rival Incyte Corp’s shares before the announcement was made, Panuwat was accused of insider trading. SEC Director Gurbir Grewal said the agency is committed to detecting illegal trade in all its forms.

This includes shares of other companies. The agency said Panuwat knew the companies were interested in buying biopharmaceutical companies with drugs in the commercial stage.

The Medivation acquisition would be one of the few targets in the market. Panuwat allegedly earned $ 107,000 from insider trading.

 

Image courtesy of Update News/YouTube

Saran G

Since starting out as a freelance writer I've worked hard to meet my bibliophile' needs by delivering high-quality content on a schedule. Freelance writing has also enabled me to enjoy a remarkable work-life balance.

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