SEC Charges Massachusetts Man in Multi-Year Trading Scheme
Litigation Release No. 24097 / April 5, 2018
Securities and Exchange Commission v. Charlie Jinan Chen and Shui Foon Mok, Civil Action No. 1:18-cv-10657-DPW (D. Mass. filed April 5, 2018)
April 5, 2018 -- The Securities and Exchange Commission today charged a Lexington, Massachusetts resident for making an extraordinarily profitable series of unlawful trades in the securities of Massachusetts-based VistaPrint, N.V.
According to the SEC's complaint, Charlie Jinan Chen used nonpublic information obtained directly or indirectly from a VistaPrint insider to place illegal trades in advance of eight VistaPrint quarterly earnings announcements over a two-year period. Each time, Chen's trades were consistent with the news-whether good or bad-in VistaPrint's pending earnings announcements. On some occasions, Chen placed extremely aggressive bets, wagering a substantial portion of his retirement savings on risky VistaPrint options before the company's announcement of disappointing earnings results in April 2014. Chen generated approximately $390,000 on the April 2014 trade and more than $900,000 in illicit profits over the course of the scheme.
In addition to detailing Chen's uncannily successful pattern of trading, the SEC also alleges that upon being questioned by the Federal Bureau of Investigation, Chen claimed that he did not know anyone who worked at VistaPrint and falsely denied having a close relationship with a VistaPrint insider and her husband with whom he had vacationed.
The SEC's complaint charges Chen with violating Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933, and seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief. The complaint also names Chen's wife, Shui Foon Mok, as a relief defendant, seeking to have her disgorge illicit gains that Chen generated by trading in her brokerage account.
The U.S. Attorney's Office for the District of Massachusetts today also announced parallel criminal charges against Chen.
The investigation, which is continuing, has been conducted by David H. London and John McCann of the SEC's Boston Regional Office and Michele T. Perillo of the Market Abuse Unit. The matter was supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Massachusetts, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.