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U.S. Securities and Exchange Commission

SEC Charges Two Securities Professionals With Insider Trading


Washington, D.C., May 10, 2007 - The Securities and Exchange Commission today charged Jennifer Xujia Wang, an employee of Morgan Stanley & Co., Inc., and her husband, Ruben Chen a.k.a. Ruopian Chen, a former employee of ING Investment Management Services, LLC, with insider trading.

In an emergency civil action filed in the United States District Court for the Southern District of New York, the Commission charged Chen and Wang with using online brokerage accounts in Wang's mother's name, Zhiling Feng, to purchase securities of three companies on the verge of announcing they would be acquired. Wang and Chen used material non-public information from Wang's employer, Morgan Stanley, which was contacted to provide services in connection with the acquisitions.

Acting on the Commission's request, the Court today issued a temporary restraining order which, among other things, freezes the defendants' assets and orders repatriation of funds taken out of the United States.

"Today's action continues our crackdown on illegal insider trading. The Commission simply will not allow industry professionals to illegally profit from their access to nonpublic information," said Linda Chatman Thomsen, Director of the Commission's Division of Enforcement.

Daniel M. Hawke, Regional Director of the Commission's Philadelphia Regional Office, stated, "We continue to sharpen the techniques we use to identify and investigate suspected insider trading. In this case, online brokerage accounts in the name of a resident of China (Feng) were surreptitiously used by persons — Wang and Chen — working and residing in New York and New Jersey. People should understand that when they misuse online brokerage accounts to commit federal securities law violations they will be identified and caught."

The Commission's complaint alleges that Wang and Chen obtained illegal profits of more than $600,000 by trading on the basis of material nonpublic information before the public announcements of three acquisitions: Morgan Stanley Real Estate's (MSRE) Dec. 19, 2005 announcement of its acquisition of Town & Country Trust; MSRE's Aug. 21, 2006 announcement of its acquisition of Glenborough Realty Trust; and Formation Capital, LLC and JER Partners' Jan. 16, 2007 announcement of its agreement to acquire Genesis HealthCare Corporation.

The complaint further alleges that Wang was privy to material nonpublic information concerning each of these pending acquisitions. Since Aug. 29, 2005, Wang has been employed as a Vice President of Morgan Stanley in a group that supported the Principal Transaction Group, which provides financing for MSRE and other entities' potential acquisitions. In this position, Wang received documents via e-mail and had access to documents on a shared network drive which demonstrated that the firm was providing financing on certain acquisitions before they were publicly announced.

The Commission's complaint alleges that Chen and Wang funded and exercised control over Feng's online brokerage accounts. When Feng's first brokerage account was opened, it was funded with money from a checking account in Wang and Chen's name. In addition, Feng, who lives in Beijing, China, did not access the two online brokerage accounts that were opened in her name on the days of the relevant trading. Rather, most of the logins to the brokerage accounts were from Internet Protocol addresses at ING and from Chen and Wang's home in New Jersey.

As a result of the conduct described in the complaint, the Commission alleges that Chen and Wang violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and, as permanent relief, seeks permanent injunctions against future violations, disgorgement of all ill-gotten gains, prejudgment interest, and civil penalties. The complaint names Feng as a relief defendant and seeks disgorgement of Chen and Wang's ill-gotten gains, plus prejudgment interest from her.

The Commission would like to acknowledge the assistance of the Options Regulatory Surveillance Authority.

The Commission's investigation is ongoing.

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For more information, contact:

Daniel M. Hawke, Regional Director
Elaine C. Greenberg, Associate Regional Director
Amy J. Greer, Regional Trial Counsel
Kingdon Kase, Senior Trial Counsel
(215) 597-3100

SEC Philadelphia Regional Office

  Additional materials: Litigation Release No. 20112



Modified: 05/10/2007