Lexington Man Charged with Insider Trading
BOSTON – A Lexington man was arrested today and charged in federal court in Boston in connection with trading on non-public information thus profiting more than $800,000.
Charlie Jinan Chen, 48, was indicted on three counts of securities fraud and one count of making a material false statement. Chen is scheduled to appear before U.S. District Court Magistrate Judge David H. Hennessy this afternoon.
The indictment alleges that Chen had a close personal relationship with a Lexington couple, one of whom was a VistaPrint employee in the Financial Planning and Analysis department, preparing and reviewing earnings data for the company’s quarterly earnings reports before the information was made public. Between July 2012 and July 2014, Chen obtained material non-public information from the Lexington couple and, on the basis of that information, engaged in risky “put and call” option trading in which Chen correctly anticipated the direction of the change in VistaPrint stock price following the earnings announcements. Specifically, in the final two quarters of 2014, Chen profited more than $800,000 by correctly predicting the direction of the change in the company’s share price following the company’s earnings announcements.
The indictment also alleges that Chen falsely told federal agents that he could not specifically recall his option trading in VistaPrint, even though it was the largest position he had taken in any stock and had generated more than $800,000 in three months. Chen allegedly used a portion of the proceeds of the insider trading scheme to purchase a condominium in Stoneham. Finally, the indictment alleges that Chen falsely claimed that the spouse of the VistaPrint employee was more of an acquaintance than a friend, when in fact Chen and his family socialized together and even vacationed together, including trips to Hawaii and Europe with the former VistaPrint employee, spouse and their family.
The charge of securities fraud provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of up to $250,000. The charge of making a materially false statement provides for a sentence of no greater than five years in prison, one year of supervised release and fine of up to $250,000. Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The United States Attorney’s Office received valuable assistance from the Securities and Exchange Commission during the investigation. Assistant U.S. Attorney Neil J. Gallagher Jr. of Lelling’s Economic Crimes Unit is prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.