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Physicist Resolves Insider Trading Charges Involving Santa Clara Company

November 21, 2016

Posted in Corporate Law

If you hear the term “insider trading” you may think about corporate big wigs sneaking off and secretly buying or selling stocks to cash in on inside information. That scenario happens but there’s a wide range of people who may seek to profit on information unavailable to the public. One recent case involves an optical physicist.

Guolin Ma was a former consultant for two China-based private equity firms. He agreed to pay more than $756,000 to settle insider trading charges filed by the federal Securities and Exchange Commission (SEC), according to an SEC press release. It charged Ma with breaking the Securities Exchange Act of 1934.

The agency claims Ma traded on confidential information he received while working for two firms as they sought to buy Silicon Valley-based OmniVision Technologies, which makes optical semiconductor devices used in mobile phones and webcams.

Ma is an optical physicist who lives primarily in China but who resided in Mountain View during the period in question. He attended various meetings and performed technical due diligence related to the potential acquisition of OmniVision. He also obtained a timeline and strategy documents from the firms about the OmniVision purchase. The SEC’s complaint filed in federal court in San Jose in June states,

  • One of the firms Ma advised joined a group of Chinese investment firms to make a bid for OmniVision.
  • Ma worked regularly for the investment firm. He monitored their current investments and evaluated possible investments in the area of optical technology.
  • Ma was aware his consulting exposed him to non-public information about the firm’s investments and other entities and that such information needed to be kept confidential.
  • Ma signed a confidentiality agreement with the firm in March 2014 prohibiting him from trading on the non-public information he learned through his work with the firm.
  • Ma owed a duty of trust or confidence to the firm he worked with and he and those at the firm shared confidential information regarding potential investments.
  • Ma “knew or recklessly disregarded” the fact he owed a duty of trust or confidence to keep the information confidential and used the inside information to place trades in his personal brokerage accounts.
  • Ma bought 39,373 shares of OmniVision in a number of purchases in April and May 2014. OmniVision’s stock price climbed 15% when the proposed purchase was announced in August 2014.
  • That gain created $367,387 in illegal profits for Ma.

photo - Ma insider tradingAs part of the agreement he didn’t admit or deny the allegations but he did agree to pay disgorgement of $367,387 plus interest of $21,986 and a penalty of $367,387. The settlement is subject to court approval.

OmniVision agreed in April 2015 to be purchased by a group including Hua Capital, CITIC Capital Holdings Ltd. and GoldStone Investment Company for about $1.9 billion. The acquisition closed in January.

The complaint describes Ma as a 58 year old a Chinese citizen. He obtained a master’s degree and completed doctoral coursework in optical physics at a university in the U.S. and later worked here for a number of private and public technology companies.

The SEC casts a wide net over those who have a connection with inside information and profit from it. If an insider trading investigation has been started against you, or legal action has been filed against you for insider trading, contact our office so we can talk about what’s going on and your options for moving forward.