SEC v. Suyun Gu, Yong Lee — U.S. Securities and Exchange Commission Litigation Release No. 26355, dated July 21, 2025.
The SEC charged Suyun Gu with a wash trading scheme involving options to collect liquidity rebates from exchanges. Gu executed over 11,000 wash trades, generating hundreds of thousands in illegal profits while actively concealing his activities. The court ordered Gu to pay over $1.3 million in disgorgement, interest, and penalties.
In Plain English
Imagine someone making a fake bet with themselves over and over again, pretending to buy and sell something to trick a store into giving them a discount coupon each time. That's similar to what Suyun Gu did with stock options. He made trades that looked real but were just between accounts he controlled, all to get special payments from stock exchanges, and he tried hard to hide what he was doing.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Targeting Liquidity Rebates Suyun Gu devised a scheme to profit from liquidity rebates offered by security exchanges. These rebates are typically paid to traders who add liquidity to the market. Gu focused on thinly-traded put options, which are more susceptible to manipulation.
- Executing Wash Trades Gu used multiple broker-dealer accounts that he controlled. He would place options orders on one side of the market, and then simultaneously place offsetting orders on the other side using different accounts, creating the appearance of legitimate trading activity.
- Exploiting Rebate Structures The scheme exploited the fee structures of different broker-dealers. Gu used accounts that paid liquidity rebates to place orders, and then used accounts that did not charge fees for taking liquidity for the corresponding orders, ensuring a net profit from the rebates.
- Concealing Identity To hide that he was trading in multiple accounts he controlled, Gu employed sophisticated methods. He used a series of virtual private servers to mask his internet protocol (IP) address, making it appear as though the trades originated from different locations.
- Deceiving Account Holders Gu further concealed his activities by adding false information to the trading account profiles of friends and family members whose accounts he was using. This created a false impression of independent account activity.
- Misleading Brokerage Firms When brokerage firms questioned his unusual trading patterns, Gu made false and misleading statements to them. This was an attempt to deflect suspicion and prevent the firms from uncovering the fraudulent nature of his scheme.
- Ignoring Red Flags Despite his trading accounts being suspended and his co-defendant, Yong Lee, ceasing trading, Gu persisted. He even continued the scheme after Lee sent him an article defining wash trading, demonstrating a willful disregard for the illegality of his actions.
- Continuing at Other Firms After facing scrutiny and account suspensions at some brokerage firms, Gu simply moved his scheme to other firms. This pattern of behavior showed his determination to continue profiting from the fraudulent wash trading.
The Enforcement Action
On July 9, 2025, the U.S. District Court for the District of New Jersey entered a final judgment against Suyun Gu, ordering him to pay $621,703 in disgorgement, $134,663 in prejudgment interest, and a $621,703 civil penalty. The judgment permanently enjoins Gu from violating securities laws. A consent judgment was entered against co-defendant Yong Lee on September 29, 2021.
Named in this action: Suyun Gu, Yong Lee.