Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, May 10, 2007

SEC Charges Morgan Stanley Employee with Insider Trading

Securities and Exchange Commission today charged Jennifer Xujia Wang, an employee of Morgan Stanley & Co., Inc., and her husband, Ruben Chen a.k.a. Ruopian Chen, a former employee of ING Investment Management Services, LLC, with insider trading.

In an emergency civil action filed in the United States District Court for the Southern District of New York, the Commission charged Chen and Wang with using online brokerage accounts in Wang's mother's name, Zhiling Feng, to purchase securities of three companies on the verge of announcing they would be acquired. Wang and Chen used material non-public information from Wang's employer, Morgan Stanley, which was contacted to provide services in connection with the acquisitions.

The Commission's complaint alleges that Wang and Chen obtained illegal profits of more than $600,000 by trading on the basis of material nonpublic information before the public announcements of three acquisitions: Morgan Stanley Real Estate's (MSRE) Dec. 19, 2005 announcement of its acquisition of Town & Country Trust; MSRE's Aug. 21, 2006 announcement of its acquisition of Glenborough Realty Trust; and Formation Capital, LLC and JER Partners' Jan. 16, 2007 announcement of its agreement to acquire Genesis HealthCare Corporation.

The complaint further alleges that Wang was privy to material nonpublic information concerning each of these pending acquisitions. Since Aug. 29, 2005, Wang has been employed as a Vice President of Morgan Stanley in a group that supported the Principal Transaction Group, which provides financing for MSRE and other entities' potential acquisitions. In this position, Wang received documents via e-mail and had access to documents on a shared network drive which demonstrated that the firm was providing financing on certain acquisitions before they were publicly announced.

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Tracked on May 18, 2007 8:13:17 AM


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