IE 11 is not supported. For an optimal experience visit our site on another browser.

Netflix insider trading suspect pleads guilty to scheme that netted $3 million, feds say

Junwoo Chon, of Bellevue, Washington, faces as long as 20 years behind bars.

A Washington man has pleaded guilty to federal insider trading allegations after prosecutors said he made $1.6 million in illegal profits gained from proprietary subscriber information passed along by an employee of Netflix.

Junwoo Chon, 50, of Bellevue, faces as many as 20 years behind bars when he's sentenced Dec. 3.

Prosecutors said he used nonpublic information on up-to-date subscriber numbers to purchase Netflix "call options" that allow investors to buy a stock in the future but at the day's price in order to profit.

Trading based on nonpublic information is a federal crime. In this case, Netflix releases subscriber figures quarterly but otherwise keeps them private.

Authorities said Chon got the information from his friend Sung Mo Jun, who was a Netflix software engineer in 2016 and 2017, years when Chon made the profitable investments ahead of quarterly announcements.

Prosecutors said Jun also gave the information to his brother, Joon Jun, "with the knowledge that the two intended to use the information to profit on the purchase and sale of Netflix securities," according to a statement Wednesday from the U.S. Attorney in Seattle.

Chon allegedly kicked back $60,000 to Sung Mo Jun and engaged in a separate insider-trading scheme involving an unnamed technology company, prosecutors said. That scheme netted him $2,000, they said.

Also charged with insider trading in the Netflix scheme are Sung Mo Jun, 49, of Bellevue; Joon Jun, 45, of Issaquah; and Ayden Lee, 33, of San Jose, California.

Lee allegedly took over the dissemination of inside information after Sung Mo Jun left Netflix in 2017, prosecutors said. Sung Mo Jun allegedly used the information for his own trades while passing it along to his brother and Chon "in advance of Netflix earnings announcements," the U.S. Securities and Exchange Commission said in a statement Wednesday.

An additional suspect, Netflix engineer Jae Hyeon Bae, gave Joon Jun subscriber growth information before the company's July 2019 earnings announcement, the SEC said. Bae was charged in a separate civil enforcement case that includes separate allegations against Chon, Sung Mo Jun, Joon Jun and Lee.

"The defendants allegedly tried to evade detection by using encrypted messaging applications and paying cash kickbacks," Joseph Sansone, chief of the SEC's market abuse unit, said in a statement.

Federal prosecutors say the operation netted more than $3 million for the defendants.

In the SEC's case, the defendants "have consented to the entry of judgments," which includes agreeing never to engage in insider trading again and to-be-determined civil penalties.

It was unclear whether the defendants have private attorneys. The federal public defender's office in western Washington state said it was unsure whether it represented the men because the case was so recent.