Chinese National Charged With Insider Trading Scheme Conducted With Principal Of Private Equity Fund

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Paul D. Delacourt, the Assistant Director-in-Charge of the Los Angeles Field Office of the Federal Bureau of Investigation (“FBI”), announced the indictment late yesterday of MICHAEL YIN, a/k/a “Shaohua Yin,” on charges of conspiracy to commit securities fraud and securities fraud in connection with an insider trading scheme relating to the securities of Lattice Semiconductor Corporation (“Lattice”).  YIN remains at large.  The case is assigned to U.S. District Judge John G. Koeltl. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Michael Yin reaped illegal gains of more than $5 million by trading on inside information he received from his friend and business associate Benjamin Chow in breach of Chow’s duties to Lattice.  Yin and Chow executed their scheme through text message exchanges neither ever thought would see the light of day and in meetings far away in Beijing, China.  Thanks to the efforts of law enforcement, Yin’s abuse of the United States markets has been uncovered and he stands indicted for his crimes.”

FBI Assistant Director Paul Delacourt said:  "Yin’s alleged use of material, nonpublic information as a road to revenue produced millions in unlawful proceeds. The FBI and our partners at the Securities and Exchange Commission will continue to investigate subjects who use criminal tactics that illegally create overnight millionaires and threaten the credibility of the marketplace."

According to the allegations in the Indictment filed today in Manhattan federal court:[1]

From approximately March 2016 to February 2017, YIN obtained from a friend and business associate, Benjamin Chow, material nonpublic information relating to a potential merger between Lattice and successive private equity firms managed by Chow, one based in Beijing, China (“Firm-1”), and one based in Palo Alto, California, with offices in Beijing, China (“Firm-2”).  YIN used such information to make more than $5 million in profitable securities trades through accounts opened in the names of YIN’s family members and associates. 

Specifically, as Managing Director of Firm-1 and later Managing Partner of Firm-2, Chow obtained material nonpublic information regarding potential merger agreements between Lattice and Firm-1 and later Firm-2.  Information concerning the potential merger agreements was subject, among other things, to nondisclosure agreements executed between Lattice and Chow on behalf of Firm-1 and later Firm-2. 

Through multiple meetings in Beijing, China, voice messages, and text exchanges, YIN obtained from Chow material nonpublic information regarding the potential merger between Lattice and Firm-1 and later Firm-2, which Chow provided to YIN in violation of the nondisclosure agreements Chow executed with Lattice on behalf of Firm-1 and Firm-2.  YIN made profitable trades in Lattice shortly after receiving the material nonpublic information from Chow, yielding a total of at least approximately $5 million in profits.  For example, on one occasion, Chow told YIN, in substance and as transcribed and translated from Chinese, that Chow should soon be able to execute a merger agreement with Lattice.  Beginning the following day, and over the course of the next three weeks, YIN purchased more than 2.2 million shares of Lattice stock. 

Chow was previously charged in this District and found guilty in a jury trial of several offenses for his role in the scheme and is presently awaiting sentencing in front of U.S. District Judge Gregory H. Woods. 

*                *                *

YIN, 45, of Beijing, China, is charged with one count of conspiring to commit securities fraud, which carries a maximum prison sentence of five years in prison, and 13 counts of securities fraud, which carry maximum sentences of 20 and 25 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the exceptional work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Max Nicholas, Scott Hartman, and Elisha J. Kobre are in charge of the prosecution. 

The allegations contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.