NEW YORK (Reuters) - A research scientist at Massachusetts Institute of Technology was sentenced on Friday to 15 months in prison after admitting to insider trading on a mining company merger that his wife, a corporate lawyer, had been working on.
Fei Yan, 31, a native of Nanjing, China and postdoctoral associate at MIT, was sentenced by U.S. District Judge Katherine Forrest in Manhattan. He was also ordered to forfeit $119,429 of proceeds from suspicious trading.
Yan’s guilty plea stemmed from his purchase of stock options of Stillwater Mining Co in the three weeks before South Africa’s Sibanye Gold Ltd on Dec. 9, 2016, announced a $2.2 billion takeover of the Colorado-based company.
Prosecutors said Yan used a brokerage account set up in his mother’s name before making his illegal trades.
They said he made some trades after conducting internet searches for “how sec detect unusual trade” and “insider trading with international account,” and viewing articles titled “U.S. Insider Trading Enforcement Goes Global” and “Want to Commit Insider Trading? Here’s How Not to Do It.”
U.S. Attorney Geoffrey Berman in Manhattan said Yan should have not done it.
“Fei Yan blatantly circumvented the securities laws that are in place to deter people from doing exactly what he did,” Berman said in a statement.
Lawyers for Yan had sought a sentence of time served, which probation officers had recommended, plus community service.
“No one gains by Mr. Yan serving a jail sentence,” his lawyer, Seth Orkand, said in an email. “Mr. Yan took full responsibility for his actions, and the sentence imposed is a regrettable ending to a regrettable incident.”
Prosecutors said the forfeiture included about $10,000 from trades in Mattress Firm Inc that Yan made after learning that South Africa’s Steinhoff International Holdings NV planned to buy the chain, in a merger his wife also worked on.
Yan did not plead guilty over those trades, but they were considered “related relevant conduct” under his plea agreement. He was arrested in Massachusetts last July.
Yan’s wife, who was not identified in court papers, had worked at the law firm Linklaters at the time of the trades. She has not been criminally charged.
The London-based firm said in July that Yan’s wife no longer worked there, and that it was cooperating with prosecutors.
(Corrects paragraphs 12-13 to remove incorrect name of defendant’s wife, who was not identified in court papers)
Reporting by Brendan Pierson and Jonathan Stempel in New York; editing by Jonathan Oatis