Former Bellevue, Washington resident pleads guilty to securities fraud for defrauding investors and marijuana businesses
Seattle – A 50-year-old Bellevue, Washington man who made more than $1.5 million dollars using inside information to trade in Netflix securities pleaded guilty today in U.S. District Court in Seattle, announced Acting U.S. Attorney Tessa M. Gorman. Junwoo Chon, is one for four men charged in the scheme that involved two former Netflix software engineers illegally providing proprietary subscriber data in advance of Netflix’s earnings announcements. Chon is scheduled to be sentenced by U.S. District Judge Richard A. Jones on December 3, 2021.
The others charged by Information in the case are Netflix software engineers Ayden Lee, 33, of San Jose, California, and Sung Mo Jun, 49, of Bellevue, Washington. Jun’s brother, Joon Jun, 45, of Issaquah, Washington is also charged in the case. The Jun brothers are scheduled for plea hearings on August 30, 2021.
“Insider trading is not a victimless crime,” said Acting U.S. Attorney Gorman. “When someone on one side of the trade has non-public information, they have an advantage over the person on the other side – the person who ultimately loses money on their securities trade. The integrity of our financial markets demands a fair and level playing field.”
According to the records filed in the case, from July 2016, to February 2017, Sung Mo Jun was employed by Netflix as a software engineer. He had access to Netflix’s internal subscriber data and had been trained by the company that such data was material, non-public information. Nevertheless, Jun disclosed that information to his close friend, Junwoo Chon, and his brother, Joon Jun, with the knowledge that the two intended to use the information to profit on the purchase and sale of Netflix securities. Between July 2016 and April 2017, Jun’s brother, Joon Jun, made $215,419 and co-conspirator Junwon Chon made $521,400. After Chon made these significant profits on the illegal insider trading, he secretly provided Sung Mo Jun with $60,000 in cash as Sung Mo Jun’s share of the profits.
After Sung Mo Jun left Netflix, he obtained additional non-public information about subscriber data from another Netflix employee, software engineer Ayden Lee, 33, of San Jose, California. Jun not only passed that information on to his brother and Chon, he also used it to make his own trades. Between April 2017 and July 2019, Sung Mo Jun made a profit of $434,086 by trading in Netflix stock and options with this inside information.
In his plea agreement, Junwoo Chon also admitted to receiving inside information from Sung Mo Jun concerning another technology company located in California. He also admitted that he received inside information from a source at a third technology company located in Seattle and traded on the inside information with respect to those technology companies. Chon’s profits from trading on that inside information was less than $2,000.
All told the insider trading attributable to insider Sun Mo Jun in Netflix securities resulted in an illicit gain of $1,170,905. Joon Jun is responsible for illicit profits of $1,106.208. Chon is responsible for illicit profits of $1,642,855 and Lee is connected to illicit profits of $453,465.
Insider trading is punishable by up to 20 years in prison and a $5 million fine. The judge will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The Securities and Exchange Commission (SEC) has filed a separate civil enforcement action against the defendants.
The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorney Justin Arnold.
Press contact for the U.S. Attorney’s Office is Communications Director Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.