Yesterday the Securities and Exchange Commisison announced that it had reached a $120,000 settlement with, Fei Yan, an MIT postdoctoral researcher who, after receiving insider information on a pair of acquisitions from his wife, was caught insider trading from an international account in part because he literally googled “insider trading with international account” as well as ”how sec detect unusual trade.” The civil settlement with the SEC is yet another punishment for Yan, who is also serving a 15-month prison sentence based on criminal charges for the same trades.
While it’s tempting to treat Yan’s misadventure as an “inexperienced criminal caught doing a crime in a dumb way” type of internet oddity — which outlets such as the New York Post and USA Today certainly did when the news of the arrest broke last year — something about the whole thing leaves me with a feeling of unease.
First off, as anyone who has watched an episode of Billions can attest, when it comes to white-collar crime, it’s rare that high-powered CEO’s, hedge fund managers, and private equity brokers are ever convicted of blatant financial malfeasance. Sometimes, as in the case of hedge funder Steven A. Cohen, it’s because while insider trading goes on at their firms with startling regularity, they maintain a degree of plausible deniability that insulates them from prosecution. Or more often, it’s because corporate accountability laws have been watered down so much in recent years that huge firms, and the individuals controlling them, are essentially unprosecutable. This has the effect of creating two legal systems — one for guys like Cohen and Wells Fargo CEO John Stumpf, and another for the rest of us.
And speaking of the latter legal system, the one that caught Yan, it allows the government to access our internet history through our ISP. The initial criminal complaint against Yan cites both searches Yan conducted as well as specific articles he viewed online. On a certain level, this is unremarkable — after all, this is by no means the first time an ISP has turned over a person’s internet history to law enforcement, and it’s a bit hard to feel sorry for someone who was trying to make a illegally make over a hundred thousand bucks. But Yan wasn’t a rube when it comes to using computers: the guy was working in MIT’s Engineering Quantum Systems department, which works on creating artificial atoms for use in quantum computers. I find it hard to believe that a quantum computer scientist who was looking up a blatantly illegal thing wouldn’t have been doing so without the use of an encrypted browser and a privacy-centric search engine such as DuckDuckGo — or, at the very least, a private browser window. Yan’s computer expertise, coupled with the fact that investigators knew exactly what he was doing online, suggests that some pretty gnarly surveillance tools were employed by investigators to access his internet history.
This isn’t me putting on a tinfoil hat, either. In 2013, the ACLU expressed concern that the Justice Department was improperly obtaining our search results, while last year, the organization pointed out that the vast majority of individuals whose internet activity is monitored by the government are never informed that they were surveilled in the first place. And within the government, Ron Wyden, the senior Democratic Senator from Oregon, has been dogged in his quest to understand the degree to which law enforcement has access to Americans’ data and how. Wyden recently called out the FBI for “misstat[ing] the number of devices rendered inaccessible by encryption” in what appeared to be an attempt to establish a legal right to access encrypted devices or to water down encryption technology so that they can gain access to more of our shit than they already have.
And finally, do you honestly think you’d be a better criminal than Fei Yan was? We do lightly illegal stuff every day — downloading pirated content, for one, as well as buying recreational amounts of marijuana in states where the substance hasn’t been legalized — and if the fuzz can catch a quantum computer scientist looking up how to obscure illegal investments, then we should all be worried the next time we go hunting for a place to watch the new Star Wars movie while it’s still in theaters or whatever.