A former top Qualcomm executive was charged with insider stock trading in a criminal case that also included federal indictments of his brother and a former Merrill Lynch stock broker.
According to an indictment filed Sept. 23 by the U.S. Department of Justice, Jing Wang, former executive vice president and president of global business operations for Qualcomm, is accused of buying stock of Qualcomm and a company it acquired, Atheros Communications, using a secret brokerage account starting in 2010.
Wang, 51 of Del Mar, allegedly used information he gleaned from attending high-level meetings about significant events at Qualcomm to buy and sell stock, eventually profiting by about $250,000, the indictment states. The events included Qualcomm’s announcement of an increased quarterly dividend payment, a stock repurchase program, and the purchase of Atheros, a Bay Area maker of Wi-Fi chips, for about $3 billion.
The indictment states that prior to these events being publicly announced, Wang arranged to buy large number of the company’s shares, and later sold them after the price appreciated.
The indictment alleges that Wang conspired to conduct the stock trades by setting up a brokerage account with the help of broker Gary Yin in the name of Jing Wang’s brother, Bing Wang, a resident of China.
In one instance, Jing Wang learned in December 2010 that the board of directors made a nonpublic offer to buy Atheros for $45 a share. The indictment states that Wang contacted Yin to use all the funds in the offshore account to buy as much Atheros stock, then trading at about $34, as possible.
When Qualcomm made the official announcement of its purchase on Jan. 5, 2011, the stock of Atheros jumped to $44.50.
Later that same month, after Jing Wang learned that Qualcomm was to release record financial results, he allegedly directed Yin to sell all the shares in Atheros and buy Qualcomm stock, then selling at $50.87 per share, according to the indictment. The day following the release of the results, Qualcomm stock increased by $4.
All told, Wang is alleged to have illegally gained about $250,000 from a series of stock trades. In addition, Wang and his brother and Yin are accused of engaging in activities to obstruct a federal investigation into the trades, as well as trying to hide his control of the brokerage account. The latter was established for a shell company based in the British Virgin Islands known as the Unicorn Global Enterprises, the indictment said.
Wang was arrested and charged in San Diego. Yin was also charged Sept. 23 and is expected to make an initial appearance Sept. 24 in U.S. District Court for the Southern District of California. An arrest warrant was also issued for Bing Wang.
U.S. Attorney Laura Duffy said the criminal indictments are intended to restore confidence in the public equity markets by ensuring everyone plays by the same rules.
“When there are two sets of rules — one for the powerful insiders and one for everybody else — the public quickly loses confidence in the stock market,” Duffy said.
— Mike Allen