Securities and Exchange Commission
Bing Sung Settles Commission Action by Agreeing
To Pay a $50,000 Penalty and To Be Barred
From the Investment Advisory Industry
Litigation Release No. 16247 / August 11, 1999
SECURITIES AND EXCHANGE COMMISSION V. BING SUNG (United States District Court for the District of Massachusetts, C.A. No. 98-11985 (MEL)
The Commission announced today that it settled its enforcement action against Bing Sung, the former chief investment officer of RhumbLine Advisers. In the action, the Commission alleged that Sung engaged in unauthorized trading and failed to disclose $162 million in losses in pension accounts owned by AT&T Corp. and the Massachusetts Pension Reserves Investment Trust ("PRIT"). On July 29, 1999, Judge Morris Lasker issued an order enjoining Sung from violating the antifraud provisions of the federal securities laws and ordering him to pay a $50,000 penalty. The order was based on Sung's consent, in which he neither admitted nor denied the Commission's allegations. Sung is a resident of Andover, Massachusetts. On August 11, 1999, based on Judge Lasker's order, the Commission barred Sung from associating with any investment adviser. Sung agreed to the bar in an offer of settlement, in which he neither admitted nor denied the Commission's findings.
On September 30, 1998, the Commission filed a complaint against Sung alleging that he engaged in unauthorized trading and failed to disclose losses in the AT&T and PRIT accounts. AT&T and PRIT both participated in an options trading program developed and managed by Sung. Both clients had written risk-limiting guidelines which prohibited Sung from placing certain types and numbers of options trades. Beginning in January 1995, to make up losses in the accounts, Sung began to deviate from the clients' written guidelines by writing unhedged and in-the-money options, and by writing drastically more options than permitted. The complaint alleged that, when losses began to mount, Sung fraudulently obtained exemptions from the Chicago Board Options Exchange and Philadelphia Stock Exchange to facilitate his risky trading. By September 1996, Sung's misconduct had caused losses of $162 million in the AT&T and PRIT accounts, which he concealed and failed to disclose.
The Court enjoined Sung from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.