SEC v. Iat Hong, et al. (hack to trade, 2017)

Judgment entered

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In May 2017 the SEC reported default judgments, entered May 5, 2017, against Iat Hong, Bo Zheng and Hung Chin, who had traded on information hacked from two New York law firms, and against Hong's mother Sou Cheng Lai as a relief defendant. The judgments order combined disgorgement of $2,853,816, interest of $184,605 and civil penalties of $5,857,140, three times each defendant's disgorgement.

The record

What was ordered

Civil penalty

$5.9m

Disgorgement

$2.9m

Prejudgment interest

$185k

Total relief

$8.9m

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 these judgments on May 9, 2017 as litigation release LR-23826, in SEC v. Hong, civil action 16-cv-9947 in the Southern District of New York. Judge Valerie Caproni entered default judgments on May 5, 2017 against Iat Hong, Bo Zheng and Hung Chin and against Hong's mother, Sou Cheng Lai, who was a relief defendant (4 individuals, 0 entities). Earlier versions of this record listed one defendant and showed the matter as still at the allegation stage.

The defendants had been charged in December 2016 with hacking two law firms' networks and trading ahead of merger announcements for almost $3 million in profit. The judgments enjoin all four from violating Section 10(b), Section 20(b) and Rule 10b-5, and Hong and Chin also from Section 14(e) and Rule 14e-3. Each defendant must disgorge profits with interest and pay a penalty equal to three times the disgorgement; Lai must return the proceeds in her accounts but pays no penalty.

By defendant, the judgments are: Hong, $462,472 disgorgement, $34,064 interest and $1,387,415 penalty; Zheng, $480,870, $29,630 and $1,442,609; Chin, $1,009,039, $60,513 and $3,027,116; and Lai, $901,436 and $60,398. The record stores the combined totals. A parallel criminal case was brought by the U.S. Attorney's Office.

For the regulator's own account of the facts, read the primary document linked above.

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. 2017-05-09 Litigation release published

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

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.