On July 7, 2026, federal prosecutors in the Eastern District of New York announced that Justin Chen, a former employee of a securities filing agent, was sentenced to 27 months in prison for his role in an insider trading conspiracy involving 13 publicly traded companies. Chen, who reportedly worked at an unnamed EDGAR filing company reviewing draft securities filings before submission to the Securities and Exchange Commission, allegedly misused material nonpublic information (“MNPI”) obtained through his job to trade ahead of market-moving announcements. In addition to the prison sentence, Chen was ordered to forfeit $1,828,442 in ill-gotten gains and pay $115,437.19 in restitution.
According to federal prosecutors, Chen and his codefendant Jun Zhen obtained confidential information from upcoming SEC filings that contained information about mergers and acquisitions, partnerships, asset sales, and quarterly earnings reports, that they allegedly used to trade in NASDAQ-listed companies before public disclosures. The defendants, who both worked for the securities filing company, allegedly conspired between March and June 2025 to purchase securities in at least 12 companies while in possession of MNPI from Form 8-K filings and press releases obtained from clients, generating at least $2.38 million in collective profits. Prosecutors accuse the defendants of engaging in conduct that violated duties of trust and confidence owed to the filing company and its clients, while noting that their securities trades were often made the day before material announcements and sold immediately after the announcements. Chen and Zhen each pleaded guilty to one count of conspiracy to commit insider trading on October 29, 2025 and October 21, 2025, respectively. Zhen is currently scheduled to be sentenced on September 9, 2026.
On August 21, 2025, the SEC filed parallel civil charges against the defendants, alleging violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3. The SEC’s case against Chen and Zhen continues.
USAO EDNY Press Release | Judgment| Docket Minute Entries – Sentencing