Former Netflix Engineer Pleads Guilty to Insider Trading
Seattle – A former Netflix software engineer, and his brother pleaded guilty Monday in U.S. District Court in Seattle to securities fraud for their roles in an insider trading ring that generated more than $1 million in illegal proceeds, announced Acting U.S. Attorney Tessa M. Gorman.
Sung Mo Jun, 49, of Bellevue, Washington, and his brother, Joon Jun, 45, of Issaquah, Washington, were charged along with two others earlier this month with insider trading in Netflix securities. The Jun brothers are scheduled to be sentenced by U.S. District Judge Richard A. Jones on December 3, 2021.
According to the plea agreement, from July 2016 to February 2017, Sung Mo Jun was employed by Netflix as a software engineer. He had access to subscriber data and was trained by the company that such data was material, non-public information.
Nevertheless, Jun disclosed that information to his brother Joon Jun, and his close friend, Junwoo Chon, 50, of Bellevue, Washington, with the knowledge that the two intended to use the information to profit on the purchase and sale of Netflix securities. After Chon made significant profits on the securities, 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. Between July 2016 and April 2017, Jun’s brother, Joon Jun, made $215,419 and co-conspirator Junwon Chon made $521,400. All told, the insider trading attributable to Sun Mo Jun in Netflix securities resulted in an illicit gain of $1,170,905.
Sung Mo Jun also obtained insider information from a “tipper” he knew at another tech company, and shared this information with his brother and Chon. Their profits from trading on that inside information was less than $2,000.
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.
Chon pleaded guilty August 18, 2021. Lee is the last to have a plea hearing, which is not yet scheduled.
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 who have each entered into settlements with the SEC.
The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorney Justin Arnold.