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SEC alleges defendant Googled how to get away with insider trading

Jul 13, 2017 | White Collar Crimes

When most of us want to learn about virtually anything — from the important to the trivial — we immediately go to our laptops, tablets or smartphones. Indeed, our first stop once we have these devices in hand is the ubiquitous search engine Google, where we can conduct detailed searches based on entire inquiries or mere keywords.

While there’s no denying the inherent value and power of internet searches, it’s important to understand that they are frequently relied upon by law enforcement officials to help build criminal cases. By way of example, consider the case of a 31-year-old engineering research scientist at the Massachusetts Institute of Technology.  

According to federal officials, the post-doctoral associate in MIT’s Research Laboratory of Electronics, a Chinese national, allegedly secured $120,000 through illegal stock trades using insider information from his wife, who was employed as an associate at a multinational law firm.

Specifically, both the Securities and Exchange Commission, and the Department of Justice allege that the man traded on inside information from his wife on two pending 2016 corporate mergers, attempting to hide the transactions via trades placed through a brokerage account held in the name of his mother, who lives in China.

The SEC, which flagged the trades as suspicious and ultimately launched an investigation, subsequently determined that the man had visited its own website. Here, it’s alleged that he read information relating to “insider trading enforcement actions with international dimensions,” including an article entitled “Want to Commit Insider Trading? Here’s How Not to Do It.”

Perhaps even more damaging, the SEC indicated in its complaint that the man had conducted Google searches for “how sec detect unusual trade” and “insider trading with international account.”

In addition to the civil enforcement action brought by the SEC, the man has been charged with both wire fraud and securities fraud. While his wife has not been charged, his mother was charged in the SEC case as a relief defendant, meaning someone who profited from the illicit actions of others.

What this case serves to underscore is that the cyber-investigative capabilities and techniques of the federal government are far more sophisticated than many of us imagine. As such, those facing charges for any manner of white collar crime should strongly consider speaking with a skilled legal professional as soon as possible.


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