On September 9, 2026, the Securities and Exchange Commission announced that a federal court in the Eastern District of New York entered a final consent judgment against Justin Chen, resolving civil claims regarding his participation in an insider trading scheme that collectively generated more than $2.2 million in illicit profits. Chen, a former employee of a company that helped clients file public documents through the SEC’s EDGAR system, was accused of using confidential information about upcoming corporate announcements—including mergers and earnings results—to make profitable securities trades on at least 13 occasions between roughly January and June 2025. He allegedly engaged in the scheme with his co-defendant and former colleague Jun Zhen. The two allegedly purchased securities based on material nonpublic information on the day before material announcements and then sold them shortly after the news became public.
In August 2025, the SEC charged the two with violating the antifraud provision of Section 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The SEC reported that a partial consent judgment was entered against Chen on March 16, 2026 that permanently enjoined him from violating these antifraud provisions. On September 8, 2026, a final judgment was issued that imposed the permanent injunction and ordered Chen to pay approximately $1.83 million in disgorgement plus over $32,000 in prejudgment interest – a payment that the court deemed satisfied by an order of restitution and forfeiture in a parallel criminal case.
On October 21, 2025, federal prosecutors in the Eastern District of New York filed a criminal information charging Chen and Zhen with conspiracy to commit insider trading in connection with the illicit trades. They each pleaded guilty to one count of conspiracy to commit insider trading on October 21, 2025 and October 29, 2025, respectively. On July 7, 2026, Chen was sentenced to 27 months in prison for his role in the scheme and was ordered to forfeit $1,828,442 in ill-gotten gains and pay $115,437 in restitution.
In the SEC’s case against Zhen, a partial consent judgment was entered in March 2026 that permanently enjoined him from violating federal securities laws. However, a final judgment has not yet been entered in the case. On September 9, 2026, a sentencing proceeding was held for Zhen, which was continued to September 30, 2026.
SEC Litigation Release | Final Judgment | USAO EDNY Press Release – July 7, 2026 | Zhen – Docket – Minute Entry (Sentencing) | Zhen – SEC’s Partial Consent Judgment