SEC Charges Massachusetts Man in Insider Trading Scheme

The SEC charged a Massachusetts trader for allegedly trading on material nonpublic information. The trader allegedly operated for over two years and earned approximately $1 million in illegal gains.

According to the SEC Complaint, Mr. Charlie Jinan Chen learned confidential information concerning VistaPrint N.V. ("VistaPrint") from a close family friend, who was employed by the company as a managerial accountant. The friend allegedly had access to material nonpublic information, including information about VistaPrint's quarterly earnings announcements before they became public. The Complaint alleges that Mr. Chen made a series of extremely risky and profitable trades in VistaPrint Securities over the course of two years, based on his knowledge of material nonpublic information. According to the SEC, Mr. Chen (i) repeatedly traded options and stocks in VistaPrint in advance of its quarterly earnings announcements, (ii) purchased options that were "out of money," and (iii) traded in only "one direction," meaning that he purchased either put or call options but never both.

In addition, Mr. Chen allegedly used the insider information when trading in his wife's brokerage accounts, so the SEC charged her as a relief defendant. The SEC is seeking a permanent injunction and disgorgement against Mr. Chen, as well as payment of a civil penalty from him and the return of all ill-gotten gains from his wife. The SEC's investigation is ongoing.

In a separate action, the Office of the U.S. Attorney General for the District of Massachusetts announced parallel criminal charges against Mr. Chen.

Premium Content

Tags