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A husband and wife from central Indiana are facing federal securities fraud charges for allegedly using insider information to profit from a $3.7 billion acquisition their employer completed in 2022.
An indictment unsealed this week does not identify the companies involved—referring to them only as Company 1 and Company 2—but details in the indictment line up with those of Cummins Inc.’s 2022 acquisition of Troy, Michigan-based manufacturer Meritor Inc.
The indictment describes Company 1 as an Indiana-based company that designs, manufactures and distributes engines, filtration and power generation products. Company 2 is described as a Michigan-based manufacturer of automotive components.
On Feb. 22, 2022, Columbus, Indiana-based Cummins announced that it planned to acquire Meritor for $36.50 per share of Meritor stock, for a total transaction value of $3.7 billion. That share price represented a 48% premium over Meritor’s Feb. 18 trading price, according to the indictment.
Fan “Jocelyn” Yang, 39, and her husband, Jing Tian, 37, have each been charged with two counts of conspiracy to commit securities fraud. The indictment was unsealed Tuesday, and the case is being handled in U.S. District Court in the District of Columbia.
The case has not yet been docketed on the federal court tracking system, so it’s not clear whether Yang and Tian have entered pleas on the charges against them or who is representing them.
IBJ reached out to both Yang and Tian at phone numbers and email addresses believed to belong to them, but neither had responded as of noon Thursday. It’s also unclear where the couple lives. The indictment identifies the couple as Indianapolis residents, but information online indicates their current address is in Carmel.
As of Wednesday, Yang’s LinkedIn profile indicated she worked at Cummins for a little over 12 years, leaving the company in June 2022. Tian’s LinkedIn profile indicated that he worked for Cummins’ Accelera division. Both of their LinkedIn profiles appear to have been taken down as of Thursday afternoon.
A Cummins spokesperson declined to confirm whether and when the two worked for Cummins, saying only that neither is currently employed at the company. The spokesperson also did not respond to a question about whether Cummins and Meritor are the unnamed companies in the indictment.
“We are unable to comment on employee information or legal matters,” Director of Global Public Relations and External Communications Melinda Koski said in an email.
The indictment said Company 1 had been discussing an acquisition of Company 2 as early as 2019, but those discussions came to a halt in March 2020. The parties resumed those discussions in February 2021, the indictment says, but the two companies did not publicly announce the planned acquisition until Feb. 22, 2022.
According to the indictment, Yang was working as a corporate development manager/strategy finance controller at Company 1 when, in October 2021, she began to acquire material non-public information about her employer’s interest in acquiring Company 2.
Tian also worked for Company 1 as a mechanical integration leader, the indictment alleges.
In November 2021, the indictment alleges, Yang and her husband began purchasing stock in Company 2, coordinating wire transfers, Zelle transfers and funding brokerage accounts in order to do so.
That same month, the indictment alleges, Yang and Tian shared the non-public information about the planned acquisition with an individual identified as Trader 4. The indictment references five unnamed traders: two Georgetown University students, the wife of one of those students, a college friend of the wife and an associate of Yang’s. It’s unclear if the unnamed traders also face criminal charges.
Yang also advised Trader 5 in November 2021 to purchase stock in Company 2. “I won’t say it’s risk free, but it’s very likely to go up $10 per share,” Yang said in a message to Trader 5, the indictment alleges.
When Trader 5 responded by joking about Yang’s good luck, Yang replied, “This is definitely not luck. But I can’t tell you more. I can tell you later,” the indictment alleges.
The indictment alleges that the insider information eventually spread to the entire group of traders, who purchased stock and/or stock options on the belief that Company 2’s stock would go up when the acquisition was publicly announced.
The indictment does not specify how much Yang and Tian are alleged to have made through the arrangement, but it says that Yang purchased 6,700 shares of Company 2 between Oct. 27 and Dec. 14, 2021, and that Yang signed a non-disclosure agreement relating to the planned acquisition on Dec. 16 of that year.
The indictment also alleges that Trader 1 made a profit of at least $178,000 on the stock trades; that Trader 3 made at least $144,000 in profit; that Trader 4 made at least $86,989 in profit; and that Trader 4’s mother made at least $56,000 in profit.
If convicted, the indictment seeks forfeiture of any property derived from proceeds.
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