SEC Charges California IT Manager and Cousin with Insider Trading
July 21, 2020
File Nos. 3-19888, 3-19889
July 21, 2020 - The Securities and Exchange Commission today announced settled insider trading charges against a former information technology employee at Sangamo Therapeutics, Inc. and his cousin for unlawfully trading Sangamo stock based on the company's nonpublic information.
According to the SEC's orders, Edmond Leung, then a manager in Sangamo's information technology group, learned in May 2017 about an unannounced collaboration between Sangamo and another pharmaceutical company. The orders find that on the morning of May 10, 2017, Leung called his cousin Joseph Zhang and recommended that Zhang quickly buy Sangamo stock. Shortly after speaking with Leung, according to the orders, Zhang bought 16,900 shares of Sangamo stock. Sangamo announced the transaction later that day after the market closed, and the following day its stock price closed up by approximately 60%. The orders find that Zhang sold all of the stock over the next several days for an illegal profit of $66,703.
The SEC's order against Leung further finds that he also traded in early August 2016 on the basis of nonpublic information. According to the order, Leung learned that Sangamo would announce the delay of certain clinical trials. The order finds that, on August 3, 2016, Leung sold 1,439 shares of Sangamo stock, less than an hour before the company announced the delays. The order further finds that, by selling his shares before the announcement, Leung avoided losses of $2,863.
The SEC's orders against Leung and Zhang find that they each violated the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the findings, Zhang agreed to a cease-and-desist order and to pay disgorgement of $66,703, prejudgment interest of $5,573, and a civil money penalty of $66,703. Without admitting or denying the findings, Leung agreed to a cease-and-desist order and to pay disgorgement of $2,863, prejudgment interest of $493, and a civil money penalty of $69,566.
The SEC's investigation was conducted by Michael Brennan and John Rymas of the Market Abuse Unit's Analysis and Detection Center at the SEC, and was supervised by Kevin Guerrero, Melissa Hodgman, and Joseph Sansone. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of California, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.