U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19531 / January 18, 2006
Securities and Exchange Commission v. Deog Kyoon Jeong, Civil Action No. CV 06-0256 DSF (C.D. Cal.)
SEC Charges Co-Founder of Silicon Image with Insider Trading
Today the Securities and Exchange Commission announced that it filed an insider trading complaint in the United States District Court for the Central District of California against Deog Kyoon Jeong, a co-founder and paid consultant to Silicon Image, Inc. Silicon Image is a Sunnyvale, California-based semiconductor company with securities trading on the NASDAQ.
The Commission's complaint alleges that on November 7, 2003, Jeong was informed by Silicon Image's Chief Executive Officer that the audit committee of the company's board of directors had launched an internal investigation into revenue recognition issues at the company. The complaint further alleges that within hours of learning this material, non-public information, Jeong sold 40,000 shares of Silicon Image at a price of $7.80 per share, in breach of the duty of trust and confidence he owed Silicon Image as a corporate insider.
As the complaint alleges, a week later, after the close of the market on November 14, 2003, Silicon Image publicly announced that it would not timely file its Form 10-Q for the third quarter of 2003, because of the audit committee's recently launched internal investigation. After the announcement, the price of Silicon Image stock fell sharply the next trading day to close at $6.40 per share - a 28% decline from the prior trading day's closing price. The complaint alleges that by unlawfully selling his shares of Silicon Image in advance of the announcement, Jeong avoided losses of $56,000.
Without admitting or denying the allegations in the complaint, Jeong consented to the entry of a final judgment that permanently enjoins him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgment also requires Jeong to pay a $56,000 civil penalty and to disgorge $56,000 in illegal trading profits and $6,363.10 in prejudgment interest thereon.