SEC Obtains Final Judgments Against Index Manager and Friend for Insider Trading

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On November 9 and 28, 2022, the U.S. District Court for the Eastern District of New York entered final judgments against Yinghang “James” Yang, a former senior index manager at a globally recognized index provider, and Yuanbiao Chen, a sushi restaurant owner, in the Commission’s insider trading case against them. The final judgments enjoin Yang and Chen from violating the antifraud provisions of the federal securities laws and order Chen to pay a $246,000 civil monetary penalty.

According to the SEC’s complaint, between June and October 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, popular stock market indices, which Yang learned through his employment. When the options increased in value after the announcements, Yang and Chen allegedly liquidated their options positions, generating approximately $912,082 in illicit profits. As alleged in the complaint, the defendants used Chen’s brokerage account to conceal the trading from Yang’s employer, which required disclosure of all employee brokerage accounts.

The final judgments against Yang and Chen permanently enjoin each of them from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and order Chen to pay a $246,000 civil monetary penalty.

In July 2022, in a parallel criminal action by the U.S. Attorney’s Office for the Eastern District of New York, the Court sentenced Yang to time served followed by one year of supervised release, three months of home detention, 100 hours of community service, mandatory financial disclosures to the Department of Probation, and a $100 special assessment. The Court also entered a forfeiture order against Yang for $912,082.

The SEC’s litigation was handled by Mary Kay Dunning and Tian Wen and supervised by Alexander Vasilescu and Sheldon L. Pollock. 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.

Read the original litigation release from the U.S. Securities and Exchange Commission here.

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