The body that regulates the US stock market has brought charges of insider trading against three former Netflix software engineers and two close associates.

The Securities and Exchange Commission (SEC) said that the individuals made more than $3 million in profits by trading on confidential information about the streaming giant's subscriber growth.

The SEC has named Sung Mo ‘Jay’ Jun as the man at the centre of what it called “a long-running scheme” to illegally trade on non-public information about Netflix's subscriber numbers – figures that are closely watched by investors.

Encrypted messaging

The watchdog alleges that Sung Mo Jun, while employed at Netflix in 2016 and 2017, repeatedly passed this information to his brother, Joon Mo Jun, and his close friend, Junwoo Chon, who both used it to trade ahead of the publication of Netflix’s financial results.

The SEC also alleges that, after Sung Mo Jun left Netflix in 2017, he and his two associates continued to receive confidential Netflix information from two other software engineers working inside the company.

The complaint accuses the trio of using encrypted messaging applications to discuss their trading, to evade detection.

"We allege that a Netflix employee and his close associates engaged in a long-running, multi-million-dollar scheme to profit from valuable, misappropriated company information," said Erin Schneider (Director of the SEC's San Francisco Regional Office).