A Los Altos resident accused of trading before a negative earnings announcement pleaded guilty to insider trading and tender-offer fraud last week.
Peter C. Chang, founder and former CEO of the Sunnyvale-based Alliance Fiber Optic Products Inc., was arrested and charged with insider trading in 2017. The U.S. Attorney’s Office alleged that he traded posed as family members in order to trade his company’s stock based on nonpublic information he obtained on the job.
In a plea agreement released Feb. 21, Chang pleaded guilty to three counts of securities fraud and insider trading and one count of fraud in connection with a tender offer.
Chang’s sentencing is scheduled May 30. The maximum penalty for a single count of this type includes 20 years in prison and a fine of $5 million. At the time of Chang’s arrest, the U.S. Attorney’s Office estimated that he generated illegal profits of approximately $800,000.
As part of his guilty plea, Chang admitted that he used brokerage accounts held in the names of his wife and his brother to purchase and sell his company’s stock. He also admitted to selling stock before earnings announcements, and then buying it before a strategic acquisition announcement.
An FBI investigation led to the charges, with assistance from the U.S. Securities and Exchange Commission’s San Francisco office. In a separate action, the SEC filed civil charges against Chang, alleging that he engaged in insider trading and failed to report stock transactions.