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U.S. Securities and Exchange Commission


Litigation Release No. 18459 / November 17, 2003

Securities and Exchange Commission v. David Chang (Case No. C-01-21071 JW) (N.D. Cal.)

SEC Prevails In Insider Trading Bench Trial

The Securities and Exchange Commission ("Commission") announced that on November 13, 2003, the Honorable James Ware, United States District Judge for the Northern District of California, entered judgment against David Chang of Santa Clara, California, finding him liable for fraud based on insider trading and tipping, after a bench trial held on October 21 and 22, 2003.

The Court found that Chang purchased the securities of his former employer, NVIDIA Corporation, four times on March 6, 2000 and one time on March 7, 2000, on the basis of confidential and nonpublic information he received in an e-mail from NVIDIA's president and CEO. The e-mail stated that NVIDIA had been awarded a contract by Microsoft Corporation to build a custom chip for the X-Box game console and detailed the expected favorable financial implications of the contract. The Court also found that Chang had received another e-mail telling employees to "keep the xbox news quiet." The Court further found that Chang tipped another person to purchase NVIDIA shares, communicating to the tippee that there was no risk in following Chang's recommendation. The Court found that the information contained in the CEO's e-mail about the X-Box was material to investors.

The Court's Judgment enjoins Chang from violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5. The Judgment further orders Chang to pay disgorgement of $66,000, representing his illegal profits from violating the securities laws, and to pay prejudgment interest. Chang is further ordered to pay a civil penalty of $50,000.

For more information regarding the Commission's complaint filed in November 2001, see Litigation Release No. 17243 (November 19, 2001).


Modified: 11/17/2003