U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18998 / December 14, 2004
Securities and Exchange Commission v. Min T. Ma and Joyce Manni Ng, Case No. C-04-5295 (MHP) (N.D. Cal. filed December 14, 2004)
SEC CHARGES TWO MERRILL LYNCH DESKTOP PUBLISHERS WITH INSIDER TRADING
The Securities and Exchange Commission charged a San Francisco couple with reaping approximately $438,000 in illegal profits by trading ahead of mergers they learned about while working as onsite desktop publishers for a prominent investment banking firm. Min T. Ma and his girlfriend Joyce Manni Ng helped prepare documents relating to upcoming, but still unannounced, mergers and acquisitions involving clients of Merrill Lynch, Pierce, Fenner & Smith Inc. The Commission's Complaint alleges that from May through November 2003, Ma and Ng invested several times their annual income in the targets of mergers they had learned about through their work on confidential deal documents and access to Merrill Lynch computer files. Shortly thereafter, when the mergers were announced and the stock prices skyrocketed, Ma and Ng liquidated their shares and doubled their money.
According to the Complaint, filed in the Northern District of California, Ma and Ng were employed as desktop publishing specialists by Bowne Business Solutions since 2000. During that period, they worked onsite at the Palo Alto, California office of Merrill Lynch, preparing merger and acquisition presentations, deal proposals, and other documents; they also had complete access to shared computer drives housing confidential deal documents. The Complaint alleges that Ma and Ng repeatedly bought stock in companies that were either Merrill Lynch clients seeking to be acquired, or acquisition targets of Merrill Lynch clients. On numerous occasions between May and November 2003, Ma and Ng bought stock in three public companies - Oak Technology, Inc., SangStat Medical Corporation, and Applied Molecular Evolution, Inc. - shortly after working on confidential deal documents. They did so notwithstanding having signed confidentiality agreements expressly prohibiting them from engaging in such trading. All told, Ma and Ng invested over $400,000 in these illegal trades, several times their combined annual income.
The respective acquisitions of these companies were announced to the public soon after defendants' stock purchases, in each instance causing the stock price to skyrocket. Ma and Ng sold their shares following the announcements to obtain gross proceeds of more than $850,000, essentially doubling their money through the use of inside information. By selling their shares after the public announcements, Ma and Ng made illegal profits totaling approximately $438,000.
The Complaint charges Ma and Ng with trading on the basis of material, nonpublic information in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks an order requiring Ma and Ng to disgorge their illegal trading profits and pay civil monetary penalties and prejudgment interest. The Commission also seeks an order permanently enjoining Ma and Ng from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The Commission acknowledges the assistance of the National Association of Securities Dealers (NASD) in this matter.