SEC files insider trading charges against corporate insider
The Securities and Exchange Commission (SEC) has announced settled charges against Xia Hong of San Jose, CA for insider trading in advance of the January 2021 announcement that Hong’s then employer Lumentum Holdings Inc. had entered into an agreement to acquire Coherent, Inc. and the November 2021 announcement that Lumentum had entered into an agreement to acquire NeoPhotonics Corporation.
According to the SEC’s order, Hong traded in the securities of Coherent and NeoPhotonics based on material nonpublic information about the impending Announcements that she obtained through her work as a Senior Director of Product Line Management at Lumentum.
In breach of her duty of trust and confidence to Lumentum, Hong purchased 100 shares of Coherent stock on January 13, 2021 and purchased 12,080 shares of NeoPhotonics between October 13 and November 1, 2021. Following the respective Announcements, the price of Coherent and NeoPhotonics stock rose, and Hong subsequently sold her shares of Coherent and NeoPhotonics stock to obtain ill-gotten gains of approximately $75,000.
The SEC’s order finds that Hong violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC’s findings, Hong consented to a cease-and-desist order and a five-year bar from acting as an officer or director of a publicly-traded company and agreed to pay disgorgement of $75,011.84, prejudgment interest of $6,672.50, and a civil penalty of $75,011.84.