Former CFO And Two Associates Given Prison Sentences For Multimillion Dollar Insider Trading Scheme
SAN FRANCISCO - King Chuen Tang was sentenced yesterday for his role in an insider trading scheme in which he and others obtained more than $5 million, United States Attorney Melinda Haag announced.
United States District Judge Jeffrey S. White sentenced Tang to serve one year and one day in prison followed by three years of supervised release. While on supervised release, Tang is to serve six months in home confinement and to perform 1,000 hours of community service. On February 21, 2013, Judge White sentenced two other defendants involved in this scheme, Joseph Seto and Zisen Yu, to six months in prison followed by three years of supervised release. While on supervised release, Seto and Yu are to serve twelve months in home confinement.
Mr. Tang pleaded guilty on March 15, 2010, to one count of conspiracy and one count of insider trading. On September 8, 2011, Seto and Yu each pleaded guilty to conspiracy. According to the plea agreements, in March 2008, Tang was the CFO at a private equity fund. As the CFO, he learned that Tempur-Pedic International, Inc. (Tempur) was planning a pre-announcement before its regularly scheduled earnings announcement. He also learned that his employer was planning to buy up to $50 million in Tempur securities. Tang shared that information with Seto and Yu. Together they traded on the inside information and netted approximately $1.9 million. In a separate scheme, in April 2007, Tang received a tip from his brother-in-law, who was a CFO at another private equity fund. Tang and others traded on that information and made approximately $3.7 million dollars.
Mr. Tang, 42, of Fremont, California, was charged on February 5, 2010, in a two-count Information with conspiracy to commit insider trading, in violation of Title 18, United States Code, Section 371, and insider trading, in violation of Title 15, United States Code, Sections 78j(b) and 78ff. Mr. Seto, 42, of San Francisco, California, and Mr. Yu, 44, of Fremont, California, were charged on June 22, 2011, in a one-count Information with conspiracy to commit insider trading, in violation of Title 18, United States Code, Section 371.
Mr. Tang, Mr. Seto, and Mr. Yu were ordered to begin serving their sentences on April 29, 2013.
Jonathan Schmidt is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Marina Pononmarchuk. The prosecution is the result of a one-year investigation by the FBI.