MIT research scientist arrested for insider trading

Hacking hacker

Hacking hacker

That was the title of an article a MIT postdoctoral associate allegedly read shortly before he used confidential information to buy stock options that federal prosecutors say made him almost $120,000.

In the case of 31-year-old MIT research scientist Fei Yen, his Google searches and subsequent trading led authorities to arrest him.

The firm is one of the elite group of magic circle legal practices in the City and opened in NY in 1972.

Authorities said that beginning in August, Yan's wife became involved in working on the Stillwater deal in her role as an associate in the NY offices of the law firm retained by Sibanye to represent it in the negotiations.

Yen setup a brokerage account using his mother's name and made several trades in Stillwater stock, all of which were profitable. Linklaters represented Steinhoff International Holdings NV, which in August 2016 said it was buying Mattress Firm.

Yan, a citizen of China, past year bought numerous stocks and call options - and searched Google about SEC enforcement practices - before South Africa's Sibanye Gold announced a $2.2 billion acquisition of Stillwater Mining, according to prosecutors. Federal officials say he purchased 300 shares of Mattress Firm and about 700 call options for Stillwater, which he sold on the first trading day following each acquisition announcement.

The court papers allege the accused ran searches with phrases such as "how sec detect unusual trade" and "insider trading with global account".

The SEC claims that Yan illegally made money using the confidential information he got from his wife, who was employed as an associate at a multinational company Linklaters.

After he was detained in Massachusetts, Yan was charged with securities fraud and wire fraud.

The evidence against Yan includes internet searches he did prior to the mergers concerning how to "commit insider trading" while avoiding detection by law enforcement.

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