U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23483 / March 9, 2016
Securities and Exchange Commission v. Jay Y. Fung (United States District Court for the District of New Jersey, Civil Action No. 16-cv-1332); Securities and Exchange Commission v. Kevin L. Dowd (United States District Court for the District of New Jersey, Civil Action No. 13-cv-00494)
The Securities and Exchange Commission today announced that a Florida man trading on inside information ahead of a pharmaceutical company merger and a friend who tipped him have agreed to settle enforcement actions against them.
Jay Y. Fung, of Delray Beach, Florida, has agreed to pay back more than $700,000 in illegal profits plus more than $60,000 in interest earned after allegedly purchasing stock and call options in Pharmasset Inc. based on his friend's tip that it was about to be acquired. The SEC alleges that Fung cashed in when Pharmasset's stock rose 84 percent after its acquisition by Gilead Sciences was publicly announced, and he paid kickbacks to his friend who provided the nonpublic information.
The SEC filed a complaint against Fung today alleging violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934, as well as Rules 10b-5 and 14e-3 thereunder, in U.S. District Court for the District of New Jersey. The U.S. Attorney's Office for the District of New Jersey today announced parallel criminal charges against Fung.
The SEC previously charged Fung's friend and tipper Kevin Dowd, of Boca Raton, Florida, who learned the nonpublic information during his employment at an investment advisory firm where a Pharmasset board member maintained an account and confidentially sought financial advice in advance of the acquisition. Dowd has since cooperated with the SEC's investigation and agreed to pay back the cash kickbacks he received from Fung and be barred from the securities industry and penny stock offerings. Dowd also pleaded guilty in a parallel criminal case in the U.S. District Court for the District of New Jersey.
The SEC's settlements with Fung and Dowd are subject to court approval.
The SEC's investigation was conducted by Paul T. Chryssikos and Scott A. Thompson of the Market Abuse Unit and the Philadelphia Regional Office with assistance from John Rymas in the Analysis and Detection Center and Christopher R. Kelly of the Philadelphia office. The investigation was supervised by Mr. Sansone. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey and the Federal Bureau of Investigation.