Yan purchased holdings in Mattress Firm and Stillwater Mining, both firms that his wife's company was working with on acquisition deals.
Summary: The husband of an associate at Linklaters has been arrested for insider trading by using the work his wife was doing to make trades.
MIT spokeswoman Kimberly Allen confirmed Yan was employed in MIT's Research Laboratory of Electronics as a postdoctoral associate.
Somehow, Yan got wind of the deal and chose to try to make some cash with the insider information he'd seen.
The prosecution alleges that the Chinese national, in order to hide his illegal activity, had placed the trades in a brokerage account under his mother's name.
His arrest was made in MA on Wednesday and he now faces charges of securities fraud and wire fraud.
'The Mattress Firm tender offer was announced on Sunday, August 7, 2016, ' state the court documents submitted in the case at the United States District Court, Southern District of NY.More news: Dileep's police custody extended till Saturday evening
On Dec. 8, the day before the Stillwater merger, the indictment alleges Yan bought 54 call options that would have allowed him to purchase the company's shares at $15 on January 20.
He purchased a number of call options over the course of 16 days starting on November 22, managing to acquire '766 contracts in advance of the December 9, 2016 pre-market-open acquisition announcement'. "Here's How Not to Do It" before buying Stillwater options.
Yan also searched for phrases such as "insider trading in an worldwide account".
And in March, Robert Schulman, an Arent Fox patent prosecution and intellectual property litigation partner in Washington, D.C., was convicted of insider trading for passing on a tip related to a billion-dollar pharmaceutical merger announced in 2010.
Prosecutors allege Yan viewed various articles on the internet, including "Want to Commit Insider?" Here's How Not to Do It'.
"We will continue to cooperate fully with the authorities on this matter, and the relevant associate has been suspended, pending further investigation, without access to the firm's systems and confidential information", Linklaters said in a statement.