Brooklyn insider trading bust: duo charged in $1M SEC filing scheme

A new insider trading case has emerged in Brooklyn, exposing a scheme that exploited confidential company data before it became public. Two men, Justin Chen, 31, and Jun Zhen, 29, have been arrested and charged with securities fraud after allegedly using non-public information from corporate filings to earn over $1,000,000 in illegal profits. The trades reportedly involved stocks such as Purple Innovation, Ondas Holdings, SigmaTron, and Signing Day Sports, and were timed just ahead of major merger announcements. How SEC filing access was misused Chen and Zhen worked for EdgarAgents.com, a private company that helps businesses prepare and file documents with the Securities and Exchange Commission (SEC) via its EDGAR system. Chen was employed as an operator and assistant manager, while Zhen worked as a typeset manager and operator. Federal prosecutors allege the duo secretly accessed and misused sensitive pre-filing data from multiple clients, making illicit trades based on this information between March and June 2025. The trading activity was reportedly synchronised, with both men placing trades within minutes or hours of one another. Investigators believe this level of coordination indicates a shared plan to profit from material, non-public information. While the headline initially suggested a direct link to the SEC, a former official clarified via social media that the accused were employed by a private third-party contractor, not the regulatory agency itself. Details of the trading pattern and arrest The complaint filed in federal court outlines how Chen and Zhen bought stocks shortly before public merger announcements, then sold them almost immediately after prices surged, securing substantial profits. Each of the transactions was tied to anticipated merger or acquisition news, including deals involving the aforementioned companies. Prosecutors allege that the men made over $1,000,000 in total profit through the scheme. Their arrests took place on Friday night at John F. Kennedy International Airport. According to law enforcement officials, the two men were intercepted by FBI agents just before boarding a flight to Hong Kong. Authorities have expressed concern that they may have been attempting to flee the United States to evade prosecution. Both were brought before a federal judge in Brooklyn on Saturday and ordered to remain in custody without bail. Broader crackdown on insider trading continues This case follows a broader enforcement push targeting insider trading in financial markets. In a related development, Terren Peizer, former CEO of health analytics firm Ontrak, was recently sentenced to three and a half years in prison after pleading guilty to insider trading charges. Peizer had reportedly misused SEC Rule 10b5-1 trading plans to sell $20,000,000 in Ontrak shares just before negative news involving a major client, Cigna, became public. In addition to the prison sentence, Peizer was ordered to pay a $5,250,000 fine and forfeit more than $12,700,000 in profits. The case against him has drawn attention to growing concerns over potential loopholes in SEC insider trading protections and has prompted calls for reform to prevent abuse of such trading plans. Authorities have not yet announced whether any further individuals may be implicated in the Brooklyn case. The Department of Justice and the FBI have stated that investigations into both traditional and digital financial crimes remain active and ongoing. The post Brooklyn insider trading bust: duo charged in $1M SEC filing scheme appeared first on Invezz

Source: Invezz