SAN DIEGO — A former Merrill Lynch stockbroker pleaded guilty today to conspiring with a one-time Qualcomm senior executive and his brother in an insider trading scheme that allegedly netted the Qualcomm executive about $250,000 in illegal profits.
Gary Yin, 54, faces up to five years in prison when he is sentenced Dec. 16 by U.S. District Judge William Q, Hayes.
Yin pleaded guilty a day after he was charged in federal court. He also admitted to obstructing a formal Securities and Exchange Commission investigation and laundering the proceeds of the insider trading scheme.
Assistant U.S. Attorney John Parmley told Magistrate Judge Nita Stormes that Yin conspired with Jing Wang, a former executive vice president and president of Global Business Operations for Qualcomm, to conceal Wang’s control of a Merrill Lynch account in the name of Unicorn Global Enterprises that Wang had used to engage in illegal insider trading.
According to an indictment charging Wang and his older brother, Bing, the former Qualcomm executive used Yin to create an offshore entity in the British Virgin Islands and to open the brokerage account for Unicorn at Merrill Lynch.
The younger of the two brothers provided documents to Yin to create the false impression that his sibling controlled the account, when in fact Jing Wang was the true owner of the account, the government alleges.
The move allegedly allowed Jing Wang to conceal his true ownership and control of the assets in the account and to avoid reporting to U.S. tax authorities. It also allowed him to disguise his transfer of large sums of money to China, according to the indictment.
In China, Yin delivered account documents to Bing Wang and rehearsed a false cover story with the elder sibling, concocted by Jing Wang, prosecutors allege. In order to make the story credible, Yin also reviewed the trading history in the offshore account with Bing Wang to enable him to lie successfully to U.S. authorities, prosecutors said.
The indictment alleges that after the creation of the Unicorn account, Jing Wang was named an executive vice president of Qualcomm and fell within the company’s insider trading restrictions for officers. As an officer, he was exposed to Qualcomm’s confidential business information, and was repeatedly notified that he was not permitted to use material, non-public information to engage in stock transactions, according to the indictment.
In order to hide the proceeds of Jing Wang’s illegal trades, and to distance him from those trades, Yin transferred money from one shell company’s brokerage account to another, according to prosecutors.
All told, Yin transferred about $525,000 from accounts related to shell companies in the British Virgin Islands, according to the U.S. Attorney’s Office.
As part of his plea agreement, Yin agreed to forfeit $17,565 in proceeds from the purchase of 1,180 shares of Qualcomm stock and $9,880 in proceeds from the purchase and sale of 1,000 shares of Atheros Communications stock.
Stormes allowed Yin — a San Diego Symphony board member — to post a $50,000 bond, keeping him free until his sentencing date. The judge said Yin could travel to China late next month for a Symphony event.
Jing Wang pleaded not guilty to the charges on Monday. He was to be released on a $3 million bond on the condition that he be confined to his home and monitored via GPS electronic surveillance until his next court appearance Oct. 8.
A warrant was issued for the arrest of his 53-year-old brother, who is believed to be a citizen and resident of China.