Securities Law Prof Blog

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

Friday, October 30, 2009

SEC Charges Former CFO of California Investment Firm with Insider Trading

The SEC today charged Chen Tang, the former chief financial officer of a San Francisco private investment firm, and six of his relatives and friends with insider trading, alleging that their scheme collectively reaped more than $8 million in illicit profits from unlawful trades in the securities of Tempur-pedic International, Inc. and Acxiom Corporation.  The SEC alleges that Tang learned non-public information as the CFO of a private equity fund and from illegal tips by his brother-in-law, who was the CFO of a venture capital fund. Tang and his trading partners, which included his brother and four friends, traded on the inside information through their personal brokerage and retirement accounts, the accounts of their spouses, children and relatives, and the accounts of several privately-offered investment funds that Tang and three of his friends managed.

The SEC has charged the seven defendants with violating the antifraud provisions of the federal securities laws. In its complaint, the Commission requests that the court permanently enjoin them from future violations of the federal securities laws, and order them to disgorge ill-gotten gains with prejudgment interest and pay financial penalties.

The SEC also named 15 relief defendants in its complaint for the purpose of seeking disgorgement of ill-gotten gains in their possession. These include family members and funds whose brokerage accounts were used by the defendants in the illegal trading. The relief defendants are not accused of any wrongdoing.

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