Former Senior Executive of Qualcomm Pleads Guilty to Insider Trading and Money Laundering Charges
|U.S. Attorney’s Office July 21, 2014|
SAN DIEGO—Jing Wang, the former Executive Vice President and President of Global Business Operations for Qualcomm, Inc. (NASDAQ: QCOM), admitted this afternoon to engaging in insider trading in the stock of both Qualcomm and Atheros Communications, Inc. (“Atheros”) using a nominee brokerage account and an offshore shell company in the British Virgin Islands (“BVI”). Wang also admitted laundering the proceeds of his insider trading using a second BVI shell company, and arranging with his brother and his former stock broker to obstruct investigations by the U.S. Securities and Exchange Commission and Federal Bureau of Investigation.
United States Attorney Laura E. Duffy and Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division announced the guilty pleas by Jing Wang today in Federal Court in San Diego, California. Wang pled guilty to one count of insider trading and one count of laundering of monetary instruments, and was ordered to return to court for sentencing on November 17, 2014 at 9:00 a.m. before the Hon. William Q. Hayes.
“Jing Wang blatantly and repeatedly abused the trust placed in him by Qualcomm and the company’s shareholders. To make matters worse, he then misused the financial system to conceal his insider trading profits, and enlisted his brother and stock broker to obstruct several investigations,” said United States Attorney Duffy. “We will continue to use our excellent partnerships with the Criminal Division, the FBI, IRS-CI and securities regulators to not only prosecute securities fraud, but also ferret out attempts to conceal criminal conduct from government investigators.”
Not satisfied with his lucrative executive position at Qualcomm, Jing Wang traded on insider information about the company’s acquisitions and earnings to gain an illegal advantage in the financial market,” said Assistant Attorney General Caldwell. “Wang then laundered close to $250,000 in insider trading profits, and created a cover-up story to hide his crimes. We will continue to prosecute those who believe they can make easy money by breaking the laws that ensure a level playing field in the financial marketplace.
FBI Special Agent in Charge Daphne Hearn commented, “Trading on inside information is a crime that undermines the public’s faith in our financial markets and puts companies at risk. The FBI will continue to use our investigative expertise and resources to detect, disrupt and dismantle sophisticated fraud schemes to ensure the public maintains full faith and confidence in our financial markets.”
Erick Martinez, Special Agent in Charge for IRS Criminal Investigation commented: “Jing Wang abused his position as a high level executive as if he was immune to our nation’s laws. Pursuing financial crime and money laundering violations by corporate executives like Jing Wang is a priority for IRS Criminal Investigation. Today’s admission of guilt by Mr. Wang is another example of IRS Criminal Investigation’s continued commitment to ensure that the laws of this nation apply to everybody.”
Wang admitted that in 2006 he used his Merrill Lynch broker in San Diego (Gary Yin) to create a BVI entity entitled Unicorn Global Enterprises (“Unicorn”) and to open a brokerage account for Unicorn at Merrill Lynch. Wang provided documents to Yin to create the false impression that his brother in China, Bing Wang, controlled the account, when in fact Wang was the true owner of the account. This allowed Wang to conceal his true ownership and control of the assets in the account.
Several years later, Qualcomm promoted Wang to Executive Vice President and imposed significant restrictions on his stock trading pursuant to its insider trading policy. As an officer, Wang was exposed to Qualcomm’s confidential business information, and was repeatedly notified that he was not permitted to misuse Qualcomm’s material, non-public information to engage in stock transactions. Despite these warnings, between 2010 and 2011, Wang abused his trusted position at Qualcomm to engage in three separate instances of insider trading.
By early 2010, Wang learned that Qualcomm planned to announce an increased quarterly dividend and a stock repurchase program. On March 1, 2010, Wang fraudulently acted on this market-moving inside information by directing Yin to use all of the assets in the Unicorn account to purchase as much Qualcomm stock as possible before the information became public. After the close of trading on March 1st, Qualcomm issued a press release announcing the dividend increase and stock repurchase program, and the company’s stock later appreciated approximately 10% in value.
Later in 2010, Wang executed a second insider trading scheme upon learning that Qualcomm was interested in purchasing Atheros, previously a publicly-traded company based in San Jose, California. On December 1, 2010, fraudulently acting on this inside information, Wang met with Yin and instructed him to sell all Qualcomm shares in the Unicorn account. Wang then told Yin to make preparations to purchase Atheros with the funds in the account, but to wait for further confirmation. Wang’s broker proceeded to liquidate all of the illegally held Qualcomm stock in the Unicorn account, reaping for Wang almost $95,000 from his first insider trading scheme.
On December 6, 2010, while attending a meeting of Qualcomm’s Board of Directors in Hong Kong, China, Wang learned that the Board authorized Qualcomm to make a non-public offer to purchase Atheros for $45 per share. Later that same day, Wang called Yin in San Diego and instructed him to go ahead and use all available funds in the Unicorn account to purchase Atheros stock. The broker followed Wang’s instructions and purchased 10,800 shares at approximately $34 per share. Qualcomm’s offer to purchase Atheros remained confidential until an article appeared in the Dealbook section of the New York Times’ website on January 4, 2011, and Qualcomm made an official announcement of the deal on January 5, 2011. Between the close of trading on January 3, 2011, and the close of trading on January 5, 2011, the price of Atheros stock jumped from approximately $37 to $44—an increase of close to 20%.
Wang’s third foray into insider trading took place just a few weeks later, on January 25, 2011, when he learned that Qualcomm was about to release record financial results. Immediately before the announcement of those earnings, Wang directed Yin to sell all the Atheros stock in the Unicorn account and use all the proceeds to purchase Qualcomm stock. The following day, after Qualcomm announced the record earnings results, Qualcomm’s stock price increased by approximately $4 per share. All told, Wang illegally gained approximately a quarter of a million dollars from these three insider trading schemes.
Wang also admitted that he took several steps to conceal his insider trading from the SEC and the FBI. For example, Wang transferred all the money in the Unicorn Account—over $525,000—to another BVI nominee brokerage account in the name of “Clearview Resources, Ltd.” (the “Clearview Account”), which Wang had opened using the name of his mother. Wang provided identification documents associated with his mother to Merrill Lynch to open this account and signed his mother’s name on account documents, making it appear that she was in control of the account. However, it was Wang who actually controlled the Clearview Account and its funds. Wang also admitted working with his brother and Yin to fabricate evidence and concoct a false cover story that would blame Bing Wang for the illegal stock trades. For example, Wang gave Yin a number of Merrill Lynch documents related to his Unicorn account and arranged for the broker to take the documents to China, give them to Bing Wang, and use them to help his brother rehearse the false cover story.
Wang was originally indicted in September 2013 after an investigation conducted by the FBI’s San Diego Field Office and the Internal Revenue Service, Criminal Investigation’s San Diego Field Division. Wang pled guilty to two of the charges contained in the original indictment, which were refiled again today in a Superseding Information. Bing Wang, who is believed to reside in China, remains charged and is currently wanted on an international arrest warrant. Gary Yin pled guilty to conspiring with Jing Wang and Bing Wang to obstruct justice and launder money, and is currently scheduled to be sentenced on September 15, 2014 (13CR3488-WQH).
In addition to praising the investigative efforts of the FBI and IRS-CI, United States Attorney Duffy and Assistant Attorney General Caldwell expressed their appreciation to the SEC’s Los Angeles Regional Office for its assistance with this matter.
Criminal Case No. 13CR3487-WQH
Del Mar, CA
SUMMARY OF CHARGES
Count 1: Title 15, United States Code, Sections 78j(b), 78ff and 17 C.F.R. § 240.10b-5—Securities Fraud (Insider Trading). Maximum Penalty: 20 years’ custody, a $5 million fine, three years’ supervised release, and a $100 special assessment.
Count 2: Title 18, United States Code, Section 1956—Money Laundering. Maximum Penalty: 20 years’ custody, a fine of $500,000 or twice the value of the property involved in the transaction, three years’ supervised release, and a $100 special assessment.
- Federal Bureau of Investigation
- Internal Revenue Service-Criminal Investigation