SEC Settles Insider Trading Action With Corporate Controller
The Commission filed another settled insider trading action. The case centered on a tender offer by Koch Industries, Inc. for Oplink Communications, Inc., announced before the market opened on November 19, 2014. Following the announcement the share price for Oplink increased 14%. In the Matter of Vi Chen, CPA., Adm. Proc. File No. 3-17361 (July 26, 2016).
Respondent Chen is a CPA licensed to practice in California. Prior to joining Oplink she worked as an accountant for a number of publicly-traded firms. In August 2016 she became the controller of Oplink, a firm that sells optical networking components and subsystems. When Ms. Chen joined the firm she signed an acknowledgment indicating that she had received, understood and agreed to comply with the insider trading policy. She was also subject to firm policies regarding trading stock trading by officers, directors and management. Firm policy only permitted trading during certain periods.
By August 2014 Koch and Oplink moved past preliminary discussions and executed a non-disclosure agreement. Over the following months the two companies engaged in due diligence with the assistance of outside advisers. Koch submitted a series of written offers to acquire Oplink.
Ms. Chen first learned about the proposed transaction at an October 13, 2014 meeting with the firm’s CFO. She then worked on the due diligence, participating in meetings and calls with Koch representatives. Ms. Chen prepared deal related work product regarding her employer’s financial condition.
During a blackout period Ms. Chen began purchasing Oplink stock. Specifically, she bought 4,700 shares in two brokerage accounts under the names of relatives. Later in October she purchased additional shares in an account under the name of her sister.
Following the deal announcement Ms. Chen liquidated the shares, realizing profits of $34,678.44. In December 2014 the transaction proceeds were withdrawn from each account. The next month she personally received $28,500 from one of the accounts. The Order alleges violations of Exchange Act Sections 10(b) and 14(e).
To resolve the action Respondent consented to the entry of a cease and desist order based on the Sections cited in the Order. In addition, she will be denied the privilege of appearing and practicing before the Commission as an accountant with the right to request reinstatement after five years. She is also denied the privilege of serving as an officer or director of a public company for five year. Ms. Chen will, in addition, pay disgorgement of $34,678.44, prejudgment interest and a civil penalty equal to the amount of the disgorgement.