U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21067 / June 4, 2009
Securities and Exchange Commission v. Lena Yan, Civil Action No. C-09-80116 MISC WHA (N.D. Cal. June 4, 2009)
SEC Files Subpoena Enforcement Action Against Restoration Hardware Finance Employee Who Refused To Testify In Insider Trading Investigation
The Securities and Exchange Commission announced today that it filed a subpoena enforcement action in the U.S. District Court for the Northern District of California against Oakland, California resident Lena Yan, an analyst in the finance department at Restoration Hardware, Inc. Pursuant to subpoenas issued by the Commission, Lena Yan was obligated to appear for sworn testimony at the San Francisco Regional Office of the Commission in an insider trading investigation involving Restoration Hardware stock. Yan appeared for testimony on May 6, 2009, but refused to answer all substantive questions by improperly invoking two marital-based privileges. Accordingly, the Commission filed its Application for an Order Requiring Compliance with Administrative Subpoenas.
The Commission's action relates to an investigation into possible insider trading in advance of the November 8, 2007 announcement by Restoration Hardware that it was to be acquired. The investigation has already led to the filing of a civil action against a Restoration Hardware finance vice president and three stock traders entitled Securities and Exchange Commission v. Francis Elias Axiaq, et al., Civil Action No. C-08-4637-CRB.
According to the Commission's filing today, Lena Yan's husband, Daniel Hew, traded in Restoration Hardware stock prior to the company's November 8, 2007 acquisition announcement, and profited significantly on the dramatic stock price increase triggered by the announcement. Accordingly, the Commission staff is investigating whether, among other things, Lena Yan and others, including her husband Daniel Hew, may have violated the federal securities laws by engaging in fraudulent insider trading in Restoration Hardware stock. In response to the Commission subpoenas, Lena Yan refused to testify substantively and instead asserted various privileges, which the Commission staff contends lacked a legal basis.
Pursuant to its Application, the Commission is seeking an Order from the federal district court compelling Ms. Yan to comply with the Commission's administrative subpoenas and to provide substantive, sworn testimony without asserting any further improper privilege claims. The Commission notes that it is currently conducting a fact-finding inquiry and has not concluded that anyone has broken the law.