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UPDATE 1-MIT post-doctoral associate arrested for insider trading

(Adds details of case, background on suspect)

BOSTON, July 12 (Reuters) - A post-doctoral associate at Massachusetts Institute of Technology was arrested on Wednesday on charges he engaged in insider trading ahead of news that Sibanye Gold Ltd planned to acquire Stillwater Mining for $2.2 billion, prosecutors said.

Fei Yan, 31, was arrested by the Federal Bureau of Investigation in Massachusetts after federal prosecutors in Manhattan brought charges against him for securities fraud and wire fraud, prosecutors said.

The U.S. Securities and Exchange Commission in a related lawsuit accused Yan of making illegal trades that netted him $120,000 ahead of the Stillwater deal and another merger based on information he obtained from his wife, an associate at a corporate law firm.

Yan, a citizen of China, is an engineering post-doctoral associate at an unnamed Cambridge-based research university, according to court papers. He is listed as post-doctoral associate on MIT's website.

A lawyer for Yan could not be immediately identified. MIT had no immediate comment.

Authorities said that beginning in August, Yan's wife became involved in working on the Stillwater deal in her role as an associate in the New York offices of the law firm retained by Sibanye to represent it in the negotiations.

She continued to work on the deal through the time it was announced in December. By then, Yan had made multiple profitable trades in Stillwater's stock using a brokerage account he established in the name of his mother in China, the criminal complaint said.

Shortly before the deal was announced, Yan conducted online research related to insider trading, searching for "how sec detect unusual trade" and accessing several articles about insider trading, the complaint said.

After the companies announced their proposed merger on Dec. 9, Yan began selling Stillwater call options he had purchased, making a profit of $109,420, the complaint said.

The case is U.S. v. Yan, U.S. District Court, Southern District of New York, No. 17-mj-1073. (Editing by Tom Brown and Matthew Lewis)