The Securities and Exchange Commission (SEC) has accused three former Netflix engineers of engaging in “long-term” insider trading, the agency announced. Engineers and two close partners were alleged to be trading confidential information about Netflix’s subscriber growth, generating a total profit of more than $ 3 million.
According to the SEC complaint, Sung Mo “Jay” Jun worked for Netflix in 2016 and 2017 and provided information about streaming giant subscribers to his brother Joon Mo Jun and friend Junwoo Chon, who used the information to trade before Netflix’s income announcements. . After Sung Mo Jun left Netflix in 2017, the SEC claims he continued to receive confidential information about the company’s subscriber growth from Ayden Lelle, described as “Netflix’s second insider” and former Netflix colleague Jae Hyeon Baelle, another engineer at the company.
Engineers used encrypted messaging applications to discuss their trading system, to avoid detection. The SEC said the group’s “unlikely successful trading over time” has eventually been labeled its Market Abuse Unit.
For employees, access to company information that can be considered sensitive is part of Netflix founder Reed Hastings’ philosophy Deadline taken into account. In his 2020 book No rules, Hastings said, sharing such information was a motivating tool for employees. “We are perhaps the only public company to share financial results internally in the weeks leading up to the end of the quarter,” Hastings wrote in his book. “The financial world considers this reckless. But information has never been leaked. When it leaks one day (I imagine it will happen), we don’t overreact. We will deal with only one case and continue to be transparent. “
Netflix did not respond immediately to the request for comment on Thursday.