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4Discovery’s Computer Forensics Testimony is Critical in SEC Insider Trading Case

Insider Trading

Jury returns guilty verdict for “front running”

Anthony Balzanto, a partner at the Chicago-based computer forensics firm, 4Discovery, provided critical testimony last week in the SEC v. Yang[1] Insider trading case, resulting in the jury returning a guilty verdict for front running and false filing.

The action centered around trading activity by the defendant Siming Yang in his role as a registered broker dealer and investment advisor in New York.  The SEC had alleged that Yang purchased shares of a publicly traded company, Zhongpin, Inc., based on non-public information, just before their CEO’s announcement that he intended to take the company private.  Yang was found guilty of purchasing Zhongpin shares in his personal brokerage account before purchasing approximately 41% of the available Zhongpin shares during one period for his firm, Prestige Trade Investments Ltd.  This practice is known as “front running”.  Front runners then earn illegal gains when the stock price goes up based on large volumes of trading activity.  Zhongpin’s shares surged over 21% after these trades, resulting in a $600,000 profit for Yang, according to the SEC.

Yang had denied making the trades, instead blaming a friend who reportedly had access to his personal trading account.  Balzanto’s computer forensics analysis and testimony at trial demonstrated that the trades were made from Yang’s I.P. addresses from locations in the U.S., China, and while he was on vacation in Miami.

“People lie, but a digital fingerprint, the topic of Detective Balzanto’s testimony?  That doesn’t lie.”
     Jonathan Polish
     Senior Trial Counsel
     United States Securities and Exchange Commission

“We are very proud of Tony’s work on this case,” said Jeffrey Hartman, also a partner at 4Discovery.  “Tony’s law enforcement background, as well as his two decades of testimony experience really paid off.  This case is a perfect example of the critical role that digital evidence is playing in a wide variety of financial misconduct matters, and we were very pleased to help the SEC with a victory in this important case.”

 


[1] SEC v. Yang.  Case No. 12-cv-02473 (N.D. Ill. Filed April 4, 2012)

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