Following a jury trial in the US District Court for the District of Massachusetts, Charlie Jinan Chen was found to have engaged in insider trading in violation of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933.
The US Securities and Exchange Commission alleged in an April 2018 complaint that Chen received confidential nonpublic information on multiple occasions about VistaPrint, N.V.*, in advance of that company’s financial results announcements. According to the SEC, Chen gained more than $800,000 by trading aggressively on the non-public information, which he learned from a close friend who was a VistaPrint insider. Later, as alleged by the SEC, Chen lied about his relationship to the insider, telling agents from the Federal Bureau of Investigation during a 2016 investigation that he did not know anyone who worked at VistaPrint, despite his having vacationed with the insider’s family.
The SEC seeks disgorgement of Chen’s insider trading profits, and possibly civil penalties of up to three times that amount.
In a parallel action by the Department of Justice, Chen was acquitted of three counts of insider trading, but was convicted of making a false statement. Chen was sentenced to two years’ probation, and fined $4,000. He has appealed the conviction to the Court of Appeals for the First Circuit.
*The company has since changed its name to Cimpress N.V.
SEC press release | SEC complaint