Netflix subscriber numbers experienced major growth between 2016 and 2019—and so did the bank accounts of three software engineers who illegally used inside information to profit from stock trades, according to the Securities and Exchange Commission. The watchdog says the three employees and two of their associates made a total of $3 million with trades based on confidential information about subscriber growth numbers, the BBC reports. According to the SEC, Sung Mo Jun repeatedly passed the information to his brother and a close friend while working for Netflix in 2016 and 2017. After he left the company, Jun allegedly continued to receive insider information from Netflix engineers Jae Hyeon Bae and Ayden Lee. All five people involved have been charged with insider trading.
"The defendants allegedly tried to evade detection by using encrypted messaging applications and paying cash kickbacks," but were caught through the use of "sophisticated analytical tools to detect, unravel, and halt pernicious insider trading schemes," Joseph Sansone, chief of the SEC's Market Abuse Unit, said in a statement. In his 2020 book No Rules Rules, Netflix founder Reed Hastings said the company keeps workers motivated by being transparent with financial information, Deadline notes. "We are perhaps the only public company that shares financial results internally in the weeks before the quarter is closed,” he wrote. “The financial world sees this as reckless. But the information has never been leaked." He added that "when it does one day leak," the company will "deal with that one case and continue with transparency." (Read more Netflix stories.)