Santa Ana, California - A former engineer at Skyworks Solutions, Inc. surrendered to law enforcement Friday on a federal criminal complaint alleging he obtained his employer’s non-public financial results without authorization and then illegally used the confidential information to purchase large amounts of Skyworks securities prior to the information being made public.
Yuh-Yue Chen, 52, of Taiwan, formerly of Irvine, has been charged with one felony count of insider trading. Chen is scheduled to make his initial court appearance this afternoon in United States District Court in Santa Ana.
According to an affidavit filed with the criminal complaint, Chen worked as an electrical principal engineer from 2003 until his termination in September 2014 at Skyworks, a publicly traded, Woburn, Massachusetts-based semiconductor company with a branch office and design center in Irvine. As a Skyworks employee, Chen received regular warnings from the company against engaging in insider trading, and as an engineer he was barred from having access to the company’s non-public earnings reports before they were publicly released.
On July 14, 2014, Chen ignored these warnings and gained unauthorized access to the Skyworks finance area on four occasions, according to the affidavit. On July 15, using non-public Skyworks financial information, Chen allegedly purchased 1,300 Skyworks $48 call options – which gives a securities buyer the right to buy certain stock within a specified time frame – at an average price of $1.90. On July 17, Skyworks, which closed at a price of $46.34 per share, released its quarterly earnings report after markets closed. On July 18, Skyworks shares opened at $50.11 per share – a per-share gain of $3.77 – in response to the earnings announcement. On the same day, Chen sold his Skyworks calls for an average price of $3.36, resulting in profits of approximately $484,645, the affidavit states.
Shortly after 9 p.m. on September 15, 2014, two Skyworks employees – in the parking lot outside the company’s Irvine office – caught Chen rifling through documents in the restricted accounting and finance office, the complaint alleges. When one of the employees entered the building and asked Chen to stop, Chen allegedly ran out of the office through a side door and escaped, running through nearby bushes. Chen did not return to Skyworks after this encounter, the affidavit states.
Five days later, Chen flew from Los Angeles International Airport to Taipei, Taiwan without informing anyone at Skyworks, court documents state. Chen was fired on September 30, 2014 for his actions 15 days earlier and after Skyworks had conducted an investigation where Chen was deemed to have been evasive. When Chen returned his work laptop computer by mail to Skyworks, the computer did not have any files or documents on it, the affidavit states.
Law enforcement interviewed Chen at LAX on March 29, 2019, where he confessed to committing insider trading, the complaint states.
If convicted, Chen faces a statutory maximum sentence of 20 years in federal prison.
Chen also faces civil charges in a lawsuit filed last month by the Securities and Exchange Commission that alleges insider trading.
A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This matter was investigated by the Federal Bureau of Investigation.
The case is being prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.