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Mr. Lee deposited an additional $50,000 into the bank account in
February 1988. In 1987, petitioner also sold insider information
to Mr. Jerome Cronin, a former University of Illinois classmate,
in exchange for $4,000.
On June 27, 1988, the Securities and Exchange Commission
(SEC) instituted a civil action against petitioner and Mr. Lee in
the U.S. District Court for the Southern District of New York for
alleged violations of sections 10(b) and 14(e) of the Securities
Exchange Act of 1934, 15 U.S.C. secs. 78j(b) and 78n(e), and SEC
Rules 10b-5 and 14e-3, 17 C.F.R. secs. 240.10b-5 and 240.14e-3,
promulgated thereunder. SEC v. Wang, 88 Civ. No. 4461 (RO)
(S.D.N.Y.). The civil complaint contained allegations that Mr.
Lee purchased insider information from petitioner about 25
companies and used that information to purchase securities. The
SEC sought preliminary and permanent injunctions prohibiting
petitioner and Mr. Lee from participating in alleged securities
law violations and from disposing of their assets. The SEC also
sought to have petitioner and Mr. Lee disgorge their profits
derived from the insider information petitioner had sold to Mr.
Lee. Petitioner entered into a settlement of the civil action
with the SEC and agreed to disgorge $125,000, the amount
remaining in the nominee bank account. In 1988, the disgorgement
was placed in a receivership fund to be used as restitution for
investors who could show a loss due to petitioner’s and Mr. Lee’s
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