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Private equity fund CFO pleads guilty to insider trading charges

King Chuen Tang has pleaded guilty to insider trading charges in the federal court in San Francisco.

In pleading guilty, Tang admitted that in the spring of 2008, while working as the chief financial officer of a private equity fund, he misappropriated inside information regarding Tempur-Pedic International.

The information involved a pre-announcement of earnings news and plans for Tang’s equity fund to purchase a large stake of Tempur-Pedic.

Tang shared that inside information with friends, and both he and his friends invested as a result of learning that information.

In 2007, Tang had received inside information from his brother-in-law who was then the chief financial officer of a venture capital fund. He also shared this information with his friends, and both he and his friends invested based on the inside information.

In all, Tang and his friends made approximately USD5.5m from the trades executed after learning the inside information.

Tang, 40, of Fremont, California, was charged in an information with one count of conspiracy to commit insider trading and one count of insider trading. Pursuant to the plea agreement, Tang pled guilty to all counts.

Tang is out on bail. He is next scheduled to appear before US District Court Judge Jeffrey S. White in San Francisco on 16 September for status. The maximum statutory penalty for the conspiracy count is five years of imprisonment and a USD250,000 fine. The maximum statutory penalty for the insider trading count is 20 years of imprisonment and a USD5m fine.

Securities fraud is a major focus of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task dorce to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.

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