SEC Charges Tax Adviser with Insider Trading
June 9, 2022
File No. 3-20896
June 9, 2022 - The Securities and Exchange Commission today announced settled charges against Lijuan "Sandra" Hao, a certified public accountant based in San Jose, California, who purchased stock on the basis of material nonpublic information she obtained while working at a tax services firm regarding two of her publicly traded tax clients.
The SEC's order finds that in June 2017, Hao purchased 3,000 shares of Finisar Corporation the morning before the company announced its fourth quarter and full fiscal year earnings results. The order finds that in the days prior to her purchase, Hao reviewed Finisar's draft Form 10-K footnotes and co-authored a memorandum supporting Finisar's decision to release a $103 million valuation allowance, which contained specific details regarding the company's positive outlook for the coming year and referenced the company's upcoming business plans. Hao obtained illicit profits of $8,790 from her purchase of 3,000 Finisar shares. The SEC's order also finds that in March 2018, Hao learned about a prospective merger between her client Oclaro, Inc. and Lumentum Holdings when she was asked to work on a due diligence request for the merger. Two days later, Hao purchased 15,000 Oclaro shares in advance of the public announcement of the merger and obtained illicit profits of $39,060. In total, Hao obtained $47,850 in illicit profits from these two trading incidents.
As a result, the SEC's order finds that Hao violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the findings in the SEC's order, Hao agreed to a cease-and-desist order, disgorgement of $47,850, pre-judgment interest of $9,507.43, and a civil penalty of $47,850. Hao also agreed to be suspended from appearing and practicing before the SEC as an accountant. The order does not provide Hao an express right to apply for reinstatement.
The SEC's investigation was conducted by Alexandra M. Arango, Laura K. Bennett, John Timmer, and Sonia G. Torrico, with assistance from Kevin Gershfeld, and supervised by David A. Becker and Carolyn M. Welshhans. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.