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.
Minnesota wildfire doubles in size, creates its own weather
A wildfire in northeastern Minnesota more than doubled in size Tuesday, growing to more than 19,000 acres, after it produced pyrocumulous clouds that generated lightning and even raindrops, fire officials said.
The Greenwood Fire’s growth, most of which happened Monday afternoon, prompted firefighters to leave McDougal Lake, about 80 miles south-southwest of Duluth, officials said. Authorities fear that structures might have been destroyed or damaged.
“We had crews embedded, and as this fire took off, it was quite an effort to communicate with forces on the ground so they could get out,” said federal fire incident spokesman Clark McCreedy.
The pullout was a success, and no injuries were reported. However, downed trees and necessary cleanup mean crews have been unable to assess damage around the lake, McCreedy said.
In addition to the firefighter pullout, 159 dwellings were evacuated Monday, according to an update from the National Wildfire Coordinating Group. Cabins, homes and recreational sites remain under threat, the group said.
Patrick Prochaska, a Minneapolis resident who built a cabin near McDougal Lake in 2012, told NBC affiliate KARE that he watched via security camera as flames mostly bypassed his property Monday, causing minor damage.
“I was feeling very scared,” he said. “At the same time, I could see that it was not doing anything to the house, and it was kind of reassuring.”
The fire in and north of Superior National Forest has mostly performed according to the weather, fire officials said. On Monday, with dry fuel on the ground and temperatures in the high 80s, it was an expanding inferno punctuated by strobes of lightning.
“The winds were drawn into the fire from all directions,” the incident’s fire behavior analyst, Michael Locke, said in a video update Tuesday. “It created what we call pyrocumulous clouds. And really high in the atmosphere … you’d see a thunderstorm, and in fact they went high enough to produce a few sprinkles of rain and even some lightning.”
Temperatures dipped into the mid-70s Tuesday, and the blaze mellowed. “The real story was cloud cover and cooler temperatures,” McCreedy said.
More of the same, and possibly rain, was in the forecast, giving officials hope that they might be able to close the book on an unusually active and dry fire season in Minnesota.
Experts have said climate change has set the stage for extreme weather, including an increase in the frequency and intensity of wildfires in the Northern Hemisphere.
Firefighters — 426 were assigned to the Greenwood event — have been confronted with “prolonged, severe drought,” making parts of Minnesota look like the fire-prone West this summer, McCreedy said.
The Greenwood Fire, which was detected Aug. 15, is believed to have been sparked by lightning.
So far, firefighters have scored no containment, and areas including McDougal Lake, Sand Lake and the Highway 2 corridor have been under mandatory evacuation orders. The federal Boundary Waters Canoe Area Wilderness was closed Saturday “due to active and increasing fire activity, extreme drought, limited resources,” the National Forest Service said in a notice.
Officials set a goal of Sept. 1 for full containment.
“We’re probably going to get more of that moderating weather for the rest of the week,” McCreedy said. “That opens the door for fire crews to make progress on the ground.”
Hiker survives grizzly bear attack at Denali National Park
A tourist from Indiana was attacked and injured by a grizzly bear at Denali National Park and Preserve in Alaska on Monday night, park officials said.
The 55-year-old tourist, whose name was not released, was hiking alone in dense fog in the Thoroughfare Pass area when a mother bear and multiple cubs charged him from nearby bushes, the National Park Service said in a statement Tuesday.
He had puncture wounds to a calf, his left ribs and his left shoulder, the agency said.
The victim used bear spray that might have cut the attack short, the park service indicated. He walked 1.5 miles to a visitor’s center where “medical personnel” vacationing at Denali treated him as a park bus driver called 911, it said.
The hiker was taken to a medical center near the park before he was transferred to Fairbanks Memorial Hospital, about 120 miles away, park officials said. He was stabilized at the Fairbanks hospital, they said.
“Due to the apparent defensive nature of this attack, there are no plans to locate the bear involved,” the park service said. “Female bears with cubs are naturally defensive of their young, especially when surprised. There is no indication that this bear is unusually dangerous.”
Grizzly bears are federally protected as a threatened species in the lower 48 states. According to the National Wildlife Federation, fewer than 1,500 grizzlies are left in the lower 48, but they thrive, comparatively, in Alaska, where they have a population of about 31,000.
The backcountry area of the attack is closed for one week as a precaution, the park service said.
House passes John Lewis voting rights bill, sends measure to Senate for tougher fight
House Democrats on Tuesday passed a sweeping voting rights bill named after Rep. John Lewis, D-Ga., the late civil rights icon.
The John Lewis Voting Rights Advancement Act was approved 219-212. All Republicans voted against the legislation.
The bill is part of congressional Democrats’ broader campaign to strengthen voting laws at the federal level to fight restrictive voting laws passed in Republican-led states, such as Texas and Georgia. However, it faces steep opposition in the Senate, where Democrats hold a wafer-thin majority.
The House returned from its recess this week to take up the bipartisan infrastructure bill and a resolution for Democrats’ $3.5 trillion budget package, which includes funding for much of President Joe Biden’s legislative agenda. The procedural motion used to pass the multitrillion-dollar resolution paved the way for the House to vote on the voting rights bill, which was re-introduced last week by Rep. Terri Sewell, D-Ala.
The legislation would require states with recent histories of discrimination to get federal “preclearance” to change their voting laws, which directly addresses the Supreme Court’s 2013 ruling in Shelby County v. Holder. The ruling gutted the preclearance system in the Voting Rights Act of 1965, which civil rights advocates argue was successful in blocking proposed voting restrictions in states and localities with histories of racial discrimination.
House Speaker Nancy Pelosi, D-Calif., said in a statement last week that Congress had “not only an ironclad Constitutional mandate, but a moral responsibility” to pass the bill.
Shortly before its passage, Pelosi said on the House floor that the bill would honor Lewis’ legacy.
“We should have the right to vote and shouldn’t be diminished by anyone. It is unpatriotic to undermine the ability of people who have a right to vote, who have access to the polls,” she said. “As John knew, this precious pillar of our democracy is under attack from one of the worst voter suppression campaigns since Jim Crow.”
It isn’t the first time House Democrats have tackled election law. In March, House Democrats passed the For the People Act, a sweeping bill that seeks to change campaign finance, voting and ethics laws.
The bill would expand access to the ballot box by creating automatic voter registration across the country by registering eligible voters whenever they interact with government agencies, restoring the voting rights of the formerly incarcerated, expanding early voting and modernizing the country’s voting systems.
However, Senate Republicans filibustered the voting rights legislation in June, and the vote to advance an amended version of the For the People Act split along party lines 50-50, short of the 60 votes needed. All Democratic-aligned senators voted to begin debate, and Republicans unanimously voted to block the bill.
Passage of the voting measure was the final vote of the week for the House, whose members are leaving Washington and won’t return until Sept. 20.
Haley Talbot contributed.
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