U.S. authorities have charged a pair of men in an insider trading scheme that capitalized on companies being added or deleted from major stock indexes.
The U.S. Securities and Exchange Commission (SEC) charged a senior index manager at S&P Dow Jones Index, Yinghang “James” Yang, and his friend, Yuanbiao Chen, in connection with a scheme that purportedly generated more than US$900,000 in illegal profits.
Yang also faces criminal charges in the case.
The SEC alleged that Yang and Chen used stock options to trade ahead of public announcements about the companies that were being added or removed from equity indexes that Yang helped manage.
The allegations have not been proven.
The SEC is seeking permanent bans and monetary penalties against Yang and Chen for violating federal securities laws.
In a parallel action, Yang is also facing criminal securities fraud charges from the U.S. Attorney’s Office for the Eastern District of New York.
He was arrested today, and is scheduled to make an initial court appearance by videoconference tomorrow.