Two Arrested for $1,000,000 Insider Trading Scheme in Brooklyn

In a significant development in the financial world, two individuals, Justin Chen, 31, and Jun Zhen, 29, have been arrested and charged with securities fraud in Brooklyn. The duo is accused of exploiting confidential company data before it became public, earning over $1,000,000 in illegal profits through a scheme that involved trading stocks such as Purple Innovation, Ondas Holdings, SigmaTron, and Signing Day Sports. The trades were timed just ahead of major merger announcements, indicating a coordinated effort to profit from material, non-public information.

Chen and Zhen were employed by EdgarAgents.com, a private company that assists businesses in preparing and filing documents with the Securities and Exchange Commission (SEC) via its EDGAR system. Chen served as an operator and assistant manager, while Zhen worked as a typeset manager and operator. Federal prosecutors allege that the pair secretly accessed and misused sensitive pre-filing data from multiple clients, making illicit trades based on this information between March and June 2025. The trading activity was reportedly synchronized, with both men placing trades within minutes or hours of one another, suggesting a shared plan to profit from the inside information.

The complaint filed in federal court outlines how Chen and Zhen bought stocks shortly before public merger announcements and then sold them almost immediately after prices surged, securing substantial profits. Each of the transactions was tied to anticipated merger or acquisition news, including deals involving the aforementioned companies. Prosecutors allege that the men made over $1,000,000 in total profit through the scheme. Their arrests took place on Friday night at John F. Kennedy International Airport, where they were intercepted by FBI agents just before boarding a flight. Authorities have expressed concern that they may have been attempting to flee the United States to evade prosecution. Both were brought before a federal judge in Brooklyn on Saturday and ordered to remain in custody without bail.

This case is part of a broader enforcement push targeting insider trading in financial markets. In a related development, Terren Peizer, former CEO of a health analytics firm, was recently sentenced to three and a half years in prison after pleading guilty to insider trading charges. Peizer had reportedly misused SEC Rule 10b5-1 trading plans to sell $20,000,000 in shares just before negative news involving a major client became public. In addition to the prison sentence, Peizer was ordered to pay a $5,250,000 fine and forfeit more than $12,700,000 in profits. The case against him has drawn attention to growing concerns over potential loopholes in SEC insider trading protections and has prompted calls for reform to prevent abuse of such trading plans.

The Department of Justice and the FBI have stated that investigations into both traditional and digital financial crimes remain active and ongoing. This case highlights the ongoing efforts to crack down on insider trading and the importance of maintaining the integrity of financial markets. The broader implications of this case underscore the need for vigilance and enforcement to prevent such schemes from undermining investor confidence and market stability.