Wife’s Tips To Husband Net $600,000
LAWFUEL – The Law Newswire – MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced today that JENNIFER
WANG, 31, was sentenced to 18 months in prison for providing her
husband with material, nonpublic information — which she stole
from her former employer, Morgan Stanley — relating toacquisitions of three publicly traded companies. WANG’s husband
RUBIN CHEN, 34, was also sentenced to 18 months’ imprisonment for
trading based on the information provided by WANG.
The sentences
were imposed by United States District Judge COLLEEN McMAHON in
Manhattan federal court. WANG and CHEN each pleaded guilty in
September to one count of conspiring to commit insider trading
and three counts of insider trading. WANG, formerly a vice
president and financial analyst at Morgan Stanley, and CHEN, a
former vice president and analyst at another financial services
company responsible for managing hedge fund investments, netted
over $600,000 from the scheme.
At today’s proceeding, Judge McMAHON stated that the
prohibition on insider trading was a “bright-line rule” that is
“indoctrinated” to all who work on Wall Street. Before imposing
sentence, Judge McMAHON also stated that insider trading “cheats
the entire investing public. It is a serious crime. . . . Only
a sentence of incarceration promotes respect for this law.”
According to documents previously filed in this case
and statements made during Wang’s and Chen’s guilty plea
proceedings:
From December 2005 through March 2007, WANG and CHEN
traded in the securities of Town and Country Trust, Glenborough
Realty Trust, and Genesis Health Care, based on material
nonpublic information WANG obtained from Morgan Stanley regarding
those companies. WANG and CHEN conducted their trading in an
account, the existence of which they hid from their respective
employers, established in the name of WANG’s mother.
While WANG was at Morgan Stanley, the company was
advising its subsidiary, Morgan Stanley Real Estate (“MSRE”), on
the acquisition of Town and Country Trust and Glenborough Realty
Trust. WANG had access to documentation regarding MSRE’s
attempted but unsuccessful acquisition of Town and Country, and
successful acquisition of Glenborough, prior to any public
disclosure of MSRE’s bids for the companies. Additionally, in
December 2006, Morgan Stanley’s Principal Transactions Group
received information relating to financing a potential
acquisition of Genesis, and WANG obtained access to a shared
computer drive that contained information relating to the
potential acquisition. WANG passed the information she obtained
from Morgan Stanley to her husband CHEN. Trading in these three
securities based on the material, nonpublic information netted
over $600,000.
WANG and CHEN, both of Englishtown, New Jersey,
resigned earlier this year from their respective employers
following a Securities and Exchange Commission inquiry and
internal investigations conducted by Morgan Stanley and by CHEN’s
employer.
In addition to 18 months in prison for each defendant,
Judge McMAHON imposed one year of supervised release for WANG,
two years of supervised release for CHEN, and ordered them to
forfeit $611,248 in illegal gains from the insider trading
scheme. Because WANG and CHEN have a baby, Judge McMAHON
staggered their sentences so that CHEN serves his term of
imprisonment before WANG begins to serve her sentence.
Mr. GARCIA, a member of the President’s Corporate Fraud
Task Force, praised the efforts of the Federal Bureau of
Investigation and the Philadelphia Office of the Securities and
Exchange Commission in the investigation of this case.
Assistant United States Attorney REED MICHAEL BRODSKY
is in charge of the prosecution.
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