Three former Netflix software engineers and two of their associates were accused of generating $3.1 million in profit by trading on insider information about Netflix’s subscriber growth, according to a complaint filed Wednesday by the Securities and Exchange Commission.
The SEC claims that Sung Mo “Jay” Jun, a former Netflix software engineer, was at the “center of the insider trading ring” and accessed key information about Netflix’s subscriber growth to tip off his brother Joon Mo Jun, and his friend, Junwoo Chon, ahead of the streaming company’s quarterly earnings from 2016 to 2019. Between 2016 and 2017, Chon paid Jun $60,000 in cash for his assistance, according to the complaint.
After Jun left Netflix in February 2017, he continued to receive insider information from Ayden Lee, another software engineer at Netflix, through 2019, which he used to inform his own trading and tip-off his brother and friend, according to the SEC. Sung Mo Jun, Joon Mo Jun, Chon, and Jae Hyeon Bae, another Netflix employee who rejoined the company after Jun left, also used a group messaging channel to share insider information and trading tips, and Bae instructed Joon Mo Jun to sell shares of Netflix ahead of the company’s 2019 earnings report, the SEC said.
“In total, Sung Mo Jun, Joon Jun, and Chon netted over $3.1 million in illicit profits from trading Netflix securities based on material, non-public information provided by Netflix insiders,” the complaint said.
The SEC charges come alongside a criminal case in Seattle, where the U.S. Attorney’s Office for the Western District of Washington filed a criminal information against Sung Mo Jun, Joon Mo Jun, Chon, and Lee.
A spokesperson for Netflix did not immediately respond to a request for comment.