The Wall Street watchdog has charged three former Netflix software engineers over an alleged insider trading ring that made $3 million.
The ex-staff members and two close associates were named in court papers.
The US Securities and Exchange Commission (SEC) said confidential Netflix subscriber growth data was used in the scheme.
The information was allegedly used to trade the streaming giant’s shares ahead of its earnings reports.
The SEC alleged that Sung Mo Jun, a former software engineer at Netflix, was at the centre of a long-running scheme to illegally trade shares using insider information about the company’s subscriber growth.
According to the complaint, while working for Netflix in 2016 and 2017, he repeatedly passed non-public information to his brother and a close friend who both used it to trade ahead of multiple Netflix earnings announcements.
The SEC also alleged that after Sung Mo Jun left Netflix, he obtained confidential subscriber growth information from two other company insiders.
“We allege that a Netflix employee and his close associates engaged in a long-running, multimillion dollar scheme to profit from valuable, misappropriated company information,” said Erin Schneider, director of the SEC’s San Francisco regional office.
The SEC said it uncovered the alleged scheme using data analysis tools to find suspiciously successful patterns of trading.
At the same time, the US Attorney’s Office for the Western District of Washington filed a criminal case against four of the defendants, which could lead to prison sentences.