MIL-OSI USA: Former CEO Of Sunnyvale-Based Tech Company Sentenced To Two Years In Prison For Insider Trading In His Company’s Securities

By   /  June 14, 2018  /  Comments Off on MIL-OSI USA: Former CEO Of Sunnyvale-Based Tech Company Sentenced To Two Years In Prison For Insider Trading In His Company’s Securities

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Source: US State of California

Defendant Traded Before Negative Earnings Announcements and an Acquisition of the Company

SAN JOSE – Peter C. Chang, founder and former chief executive officer of a Sunnyvale-based fiber optics equipment maker, was sentenced to 24 months in prison today for insider trading and tender offer fraud, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Lucy H. Koh, United States District Judge.    

Chang, 60, of Los Altos, Calif., was the President, Chief Executive Officer (CEO), and Chair of the Board of Directors of Alliance Fiber Optic Products, Inc. (AFOP), a manufacturer of fiber optic components based in Sunnyvale, Calif.  AFOP was publicly traded on the NASDAQ until the company was acquired in June 2016.  According to his February 21, 2018, guilty plea, Chang used two brokerage accounts, held in the names of his brother and his wife, to purchase and sell AFOP stock.  He admitted that he had access to material nonpublic information about the company, and that his duty of confidentiality and company policies regarding insider trading prevented him from trading on the information.

Further, Chang admitted that he sold AFOP stock in the days prior to two public announcements of the company’s earnings on October 28, 2015 and February 18, 2016.  The timing of these sales allowed Chang to avoid losses he would otherwise have incurred when the stock price dropped after the announcements.  Chang further admitted that in March 2016, he purchased AFOP stock while he knew material nonpublic information about a potential acquisition of the company by a larger public company.  The acquisition of AFOP was publicly announced on April 7, 2016.

In addition to the prison term, Judge Koh ordered Chang to serve three years of supervised release.  Chang is currently free on bond; Judge Koh ordered him to self-surrender on or before September 12, 2018, to begin serving his sentence.   

Assistant U.S. Attorney Lloyd Farnham is prosecuting the case with the assistance of Claudia Hyslop, Phillip Villanueva, and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.  Additional assistance was provided by the San Francisco Regional Office of the Securities and Exchange Commission.
 

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