The group allegedly earned US$3M
United States regulators are taking legal steps against five individuals, including three former Netflix employees, for illegally trading the streaming giant's confidential subscriber growth data. The accused allegedly earned a total profit of US$3M by trading insider information ahead of multiple Netflix quarterly earning presentations, The Sydney Morning Herald reported.
One of the primary suspects in the case is a former Netflix software engineer, who allegedly leaked the information to his brother and a close friend, who both traded said information in exchange for profit. After the software engineer’s departure from the company in 2017, the leaked information on subscriber growth came from another Netflix employee, the Securities and Exchange Commission's (SEC) complaint said.
"We allege that a Netflix employee and his close associates engaged in a long-running, multimillion dollar scheme to profit from valuable, misappropriated company information," said Erin Schneider, head of SEC's San Francisco Office.
Aside from the previous four involved, another Netflix engineer was pulled into the case after he allegedly tipped similar information ahead of the streaming giant's July 2019 earnings report.
The group managed to evade authorities by using encrypted messaging applications and paying cash kickbacks, said Joseph Sansone of the SEC’s Market Abuse Unit, who added that the case reflected the department's use of analytical methods to bust illicit trading schemes. The Washington Newsday reported that the five will be facing insider trading charges, and have all agreed to a court settlement.
However, the report said the US Attorney's Office has also filed separate criminal charges against the primary accused, his brother, close friend, and his co-worker.