Justin Chen; Jun Zhen

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26380 / Aug. 21, 2025

Securities and Exchange Commission v. Chen et al., No. 25-cv-4580 (E.D.N.Y. filed Aug. 18, 2025)

SEC Charges Two Brooklyn Men with $2 Million Insider Trading Scheme

On August 18, 2025, the Securities and Exchange Commission filed insider trading charges against two former employees of a company that assists clients with public filings, for allegedly using material nonpublic information to trade the stocks of their employer’s clients.

According to the SEC's complaint, Justin Chen and Jun Zhen were employed by a company that assisted its clients with making public filings in the SEC’s EDGAR system. Through that employment, Chen and Zhen allegedly obtained material nonpublic information about clients’ forthcoming announcement of events like mergers and earnings results. From around January to June 2025, despite their employer’s prohibition on engaging in insider trading, Chen and Zhen allegedly traded on the basis of material nonpublic information on at least 13 occasions and generated over $2 million in ill-gotten profits.

The SEC's complaint, filed in the U.S. District Court for the Eastern District of New York, charges Chen and Zhen with violating the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The complaint seeks a final judgment ordering Chen and Zhen to pay disgorgement with prejudgment interest and civil penalties and enjoining them from committing future violations of the charged provisions.

On June 28, 2025, Chen and Zhen were charged in a parallel criminal action brought by the U.S. Attorney's Office for the Eastern District of New York.

The SEC's investigation originated from the Enforcement Division's Market Abuse Unit, which used Consolidated Audit Trail (CAT) data to analyze Chen and Zhen's suspicious trading activity.

The SEC's investigation was conducted by David Bennett, John S. Rymas, and Lindsay S. Moilanen of the Enforcement Division's Market Abuse Unit and supervised by Market Abuse Unit Chief Joseph G. Sansone. The SEC's litigation is being led by Mr. Bennett and Ms. Moilanen and supervised by Daniel Loss of the SEC’s New York Regional Office. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of New York and the FBI.