Silicon Valley Business Journal: Former CEO of Sunnyvale tech company sentenced to 2 years in prison for insider trading

Silicon Valley Business Journal
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Former CEO of Sunnyvale tech company sentenced to 2 years in prison for insider trading

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By SVBJ staff
Jun 14, 2018, 7:29am PDT Updated Jun 14, 2018, 7:31am PDT

Peter Chang, the founder and former president and CEO of Sunnyvale-based Alliance Fiber Optic Products, has been sentenced to two years in prison for insider trading and tender offer fraud, the U.S. Justice Department said on Wednesday.

Chang was charged last year with insider trading ahead of the company's earnings and sale in June 2016 to manufacturing giant Corning Inc.

Alliance Fiber, a manufacturer of fiber optics components, was publicly traded on the Nasdaq stock exchange under the ticker symbol "AFOP."

The U.S. Securities and Exchange Commission said Chang, 60, admitted in his February 2018 guilty plea to using secret brokerage accounts in the names of his wife and his brother to trade and profit on non-public information about his Sunnyvale company.

Chang twice sold shares of the company ahead of its public earnings announcements, prosecutors said. "The timing of these sales allowed Chang to avoid losses he would otherwise have incurred when the stock price dropped after the announcements," the Justice Department said. "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."

Corning bought Alliance Fiber for about $305 million in a deal that Chang stood to gain about $30 million from through stock and options he held. The insider trading brought him an additional profit of about $800,000, according to prosecutors.

"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," the Justice Department said this week.

Along with 24 months in prison, U.S. District Court Judge Lucy H. Koh sentenced Chang to three years of supervised release.
By SVBJ staff
Jun 14, 2018, 7:29am PDT Updated Jun 14, 2018, 7:31am PDT
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