A former credit analyst and Chinese national has been found liable in civil court of insider trading charges brought by the U.S. Securities and Exchange Commission.
Nan Huang, a former analyst with Capital One Financial Corporation, has been found liable for using non-public sales data from the credit card company to trade stocks.
In the U.S. District Court for the Eastern District of Pennsylvania, in Philadelphia, a jury found that Huang was liable for his conduct. A penalty will be determined at a later date.
According to the SEC’s lawsuit, filed in January 2015, Nan Huang and his former coworker and codefendant Bonan Huang searched Capital One’s private database for sales information on more than 170 publicly traded stocks. Bonan Huang, no relation, settled with the SEC in December 2015 for $4.7 million in penalties, disgorgement and interest.
The SEC’s complaint says that after being dismissed by Capital One last year, the Huangs, both of whom are Chinese nationals, fled to China and remain there.
The men allegedly used Capital One’s private data to determine whether a company’s sales were increasing and decreasing, then conducted trades ahead of quarterly sales and earnings announcements of several companies, including chain restaurants and retailers, between November 2013 and January 2015.
According to the SEC, a $147,000 initial investment grew to $2.8 million after three years of illicit trading, a return of over 1,800 percent. Nan Huang personally made around $1.5 million from the trades, the SEC alleges.
In his defense, Nan Huang admitted to using non-public data to conduct trades, but argued that he did not gain any unfair advantage from using the information.
Earlier in the case, a federal judge ruled that the SEC could not compel Nan or Bonan Huang to reveal passwords for their wireless phones as doing so may have breached the defendants’ Fifth Amendment protection from self-incrimination.