SEC v. Iat Hong, et al. (hack to trade, 2016)

Judgment entered

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In December 2016 the SEC charged Iat Hong, Bo Zheng and Hung Chin with trading on merger information hacked from two New York law firms. On May 5, 2017 the court entered default judgments against all three, with injunctions, disgorgement with interest and penalties of three times each man's disgorgement, about $7.9 million in total.

The record

What was ordered

Civil penalty

$5.9m

Disgorgement

$2m

Prejudgment interest

$124k

Total relief

$7.9m

Alleged gain

—

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The Securities and Exchange Commission announced this action on December 27, 2016 as litigation release LR-23711, filing civil action 16-cv-9947 in the Southern District of New York. The defendants are Iat Hong, Bo Zheng and Hung Chin; Hong's mother is named as a relief defendant to recover gains in her accounts.

The SEC alleges the three hacked the networks of two law firms by installing malware and compromising accounts that exposed all staff email, copied dozens of gigabytes of messages, and focused on mergers-and-acquisitions lawyers. They then allegedly bought shares in at least three companies ahead of deal announcements. The release puts the illegal profits at almost $3 million. A U.S. Attorney's Office announced criminal charges the same day.

Outcome. In a later release (LR-23826, May 2017) the SEC reports that Judge Valerie Caproni entered default judgments on May 5, 2017, meaning the defendants did not defend the case. Each was permanently enjoined from violating Section 10(b) and Rule 10b-5 and ordered to pay disgorgement with prejudgment interest and a civil penalty equal to three times disgorgement: Hong $462,471.70 disgorgement, $34,063.78 interest and a $1,387,415.10 penalty; Zheng $480,869.62, $29,630.42 and $1,442,608.86; Chin $1,009,038.74, $60,512.82 and $3,027,116.22. The totals stored here sum the three defendants. The relief defendant was separately ordered to pay $901,435.67 plus $60,398.19 interest, which is not included.

What the source does not show: any criminal outcome for the three, or how much of the money was collected.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Hack to trade — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2016-12-27 Litigation release published
2. 2017-05-05 Default judgments entered against Hong, Zheng and Chin

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEC litigation release
• SEC litigation release on default judgments

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Same matter

The library links these 2 records because they appear to concern one matter: the same lead defendant, an overlapping technique tag and close filing dates, or a shared court docket or a release that cites the other. Records are listed by date filed.

This grouping is the library's, made by matching names, techniques, dates and citations when the site is built. It is not the regulator's or a court's determination that the records are one case, and it errs towards missing a link rather than making a false one.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added September 20, 2026. submit a correction.