Jing Wang, a former Qualcomm Inc. Executive Vice President began by constructing a cover-up. Then he engaged in insider trading, using inside information taken from his employer. The scheme failed. Mr. Wang has been sentenced to 18 months in prison and directed to pay a $500,000 fine after pleading guilty to securities fraud based on his insider trading, money laundering tied to his efforts to evade detection and admitted to obstruction. U.S. v. Wang, 3:13-cr-03487 (C.D. Calif. Filed Sept. 20, 2013).
Mr. Wang traded on inside information obtained from his employer in three instances. First, on March 1, 2010, after the close of the market, Qualcomm announced an increase in its dividend and a stock repurchase plan. Earlier, in February Mr. Wang became aware of these plans. On the morning of March 1, he attended a company board meeting where the plan was discussed. Later that day he instructed his friend and broker Gary Yin, a registered representative at Merrill Lynch, to use all of the funds in an account he controlled to purchase Qualcomm shares. Mr. Yin also purchased shares. After the announcement the share price increased and both men sold the securities at a profit.
Second, on January 5, 2011 Qualcomm announced the acquisition of Atheros Communications, Inc. Prior to the announcement Mr. Wang learned about the deal through the course of his duties. He also attended a board meeting where it was discussed. He purchased shares of Atheros as did Mr. Yin. After the announcement the share price increased and both men sold their shares at a profit.
Third, on January 26, 2011 Qualcomm announced increased guidance. During the prior month Mr. Wang became aware that the firm was considering announcing increased guidance. That information was confirmed at a December 6, 2010 board meeting Mr. Wang attended. The day before the announcement he telephoned Mr. Yin and instructed him to purchase company shares. After the announcement the share price increased. Mr. Wang sold all of his shares at a profit.
The cover-up traces to 2006 before the insider trading. In that time period Messrs. Wang and Yin created off-shore entities and set-up accounts. The ownership of the accounts was designed to make it appear that they belonged to others. The money laundering charge was based on the efforts of Mr. Wang to transfer over $525,000 from one of the offshore accounts that included about $250,000 from the insider trading to another nominee brokerage account in the British Virgin Islands. As part of the plea agreement Mr. Wang also admitted to fabricating evidence and a false cover story in conjunction with his brother Bing Wang and Mr. Yin. See also SEC v. Wang, Civil Action No. 3:13-cv-02270 (S.D. Cal. Filed Sept. 23, 2013)(Mr. Yin pleaded guilty to conspiring with Jing Wang and Bing Wang to obstruct justice and launder money).