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SEC data analysis tool uncovers insider trading by executive

Jaclyn Jaeger | July 24, 2018

A senior executive at Alliance Fiber Optic Products agreed to settle charges that he made nearly $200,000 in illicit profits by trading on inside information in advance of three disappointing earnings announcements by the company, the Securities and Exchange Commission announced on July 24.

According to the SEC, the case resulted from the SEC Market Abuse Unit’s Analysis and Detection Center, which uses data analysis tools to detect suspicious patterns—such as improbably successful trading in advance of earnings announcements over time. Enhanced detection capabilities enabled SEC enforcement staff to identify the unusual trading activity.

The SEC order found that Yao Li, as vice president of technology at Alliance Fiber Optic Products (AFOP), learned during regular meetings with AFOP’s senior executives that the company was likely going to miss its revenue guidance in three different quarters during...

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