SEC Wins Final Judgment Against Justin Chen in $2.2 Million Insider Trading Case
SEC wins final judgment against Justin Chen, ordering $1.83 million disgorgement tied to an alleged $2.2 million EDGAR insider trading scheme in New York.
Summary
SEC Litigation Release No. 26634, dated September 9, 2026, reported that the Eastern District of New York entered a final consent judgment against Justin Chen on September 8 in SEC v. Chen et al., No. 25-cv-4580, filed August 18, 2025. The release describes an alleged $2 million insider trading scheme, while the complaint alleges Chen and a colleague earned more than $2.2 million by trading at least 13 times from around January through June 2025. While employed by an unnamed company helping clients submit SEC EDGAR filings, they allegedly obtained material nonpublic information about forthcoming mergers and earnings results and traded despite their employer’s prohibition.
A March 16, 2026 partial consent judgment permanently enjoined Chen from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3. The final judgment reimposed that relief and held him liable for $1,828,442 in disgorgement plus $32,361 in prejudgment interest, deemed satisfied by restitution and forfeiture orders in United States v. Chen, 25 cr. 303. The SEC Market Abuse Unit identified suspicious trading through Consolidated Audit Trail data. David Bennett, John S. Rymas and Lindsay S. Moilanen conducted the investigation under Unit Chief Joseph G. Sansone; Moilanen leads the litigation under Christopher Colorado of the New York Regional Office, with assistance from the U.S. Attorney’s Office for the Eastern District of New York and FBI.
Positives
- $1,828,442 in disgorgement and $32,361 in prejudgment interest establish substantial financial liability for Chen.
- Permanent injunctions bar Chen from future violations of key Exchange Act antifraud and tender-offer trading provisions.
- Consolidated Audit Trail data enabled the SEC Market Abuse Unit to analyze and identify the suspicious trading activity.
- SEC, FBI and federal prosecutors coordinated civil and criminal actions addressing the same alleged conduct.
Risks & concerns
- More than $2.2 million in alleged illicit profits arose from at least 13 trades between January and June 2025.
- Material nonpublic merger and earnings information was allegedly obtained through employment at an SEC filing services provider.
- The employer’s insider trading prohibition allegedly failed to prevent Chen and his colleague from trading on confidential client information.
- Chen’s civil payment obligation is deemed satisfied by restitution and forfeiture orders in the parallel criminal case.
