U.S. securities regulators have accused two former Capital One Financial Corp data analysts with engaging in insider trading based on sales data the credit card issuer had collected from millions of its customers.
The U.S. Securities and Exchange Commission on Wednesday filed a lawsuit in federal court in Philadelphia against Bonan Huang and Nan Huang, saying the analysts used the nonpublic data to trade in the shares of consumer retail companies ahead of sales and earnings reports.
The lawsuit said from November 2013 to January 2015, the two analysts, who had access to the data as fraud investigators, made hundreds, if not thousands, of keyword searches for sales data on at least 170 publicly traded companies.
The SEC said the two employees were able to analyze the data to determine if a company's sales were increasing or decreasing on a periodic basis.
Bonan Huang, 32, and Nuan Huang, 36, frequently saved the data on Capital One's computers, designating companies such as Apple Inc by their ticker symbol, the complaint said.
The SEC said that from January 2012 to January 2015, the analysts made $2.83 million through share trading for a three-year return of 1,819 percent. Trades in some of the retailers were done using put options and call options, the SEC said.
Lawyers for Bonan Huang, a Chinese national residing in Glen Allen, Virginia, and Nan Huang, a resident of Richmond, Virginia, could not be identified and attempts to contact them were unsuccessful.
Besides Apple, the lawsuit does not identify other stocks by name, though it said they included an outdoor sporting goods company, a fashion accessories retailer, and a seller of "fast-casual" food.
Redacted press releases by those companies filed in federal court match ones originally issued by Cabela's Inc, Coach Inc, and Chipotle Mexican Grill Inc.
The SEC lawsuit largely avoided referring to Capital One by name, calling it a large credit card issuer. But the complaint, on one page, referred by name to Capital One, which fired the analysts on Jan. 16.
"We have been working closely with the SEC on this investigation, which involves two former employees," said Tatiana Stead, a Capital One spokesman.
A federal judge on Wednesday signed a temporary restraining order freezing the brokerage and bank account assets of the two former staff members, court records show.
The case is Securities and Exchange Commission v. Huang, U.S. District Court, Southern District of New York, No. 15-269.
