SEC Charges Charlie Chen and Shui Foon Mok in Multi-Year Trading Scheme
On April 5, 2018, The Securities and Exchange Commission charged Charlie Chen for making an extraordinarily profitable series of unlawful trades in the securities of Massachusetts-based VistaPrint, N.V.
According to the SEC’s complaint, Charlie Chen used private information obtained directly or indirectly from a VistaPrint insider to place illegal trades in advance of eight VistaPrint quarterly earnings announcements over a two-year period. Each time, Charlie Chen’s trades were consistent with the news – whether good or bad-in VistaPrint’s pending earnings announcements. On some occasions, Charlie Chen placed extremely aggressive bets, wagering a substantial portion of his retirement savings on risky VistaPrint options before the company’s announcement of disappointing earnings results in April 2014. Charlie Chen generated approximately $390,000 on the April 2014 trade and more than $900,000 in illicit profits over the course of the scheme.
In addition to detailing Charlie Chen’s uncannily successful pattern of trading, the SEC also alleges that upon being questioned by the Federal Bureau of Investigation, Charlie Chen claimed that he did not know anyone who worked at VistaPrint and falsely denied having a close relationship with a VistaPrint insider and her husband with whom he had vacationed.
The SEC’s complaint charges Charlie Chen with violating Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 there under and Section 17(a) of the Securities Act of 1933, and seeks disgorgement of ill-gotten gains plus interest, penalties, and injunctive relief. The complaint also names Charlie Chen’s wife, Shui Foon Mok, as a relief defendant, seeking to have her disgorge illicit gains that Charlie Chen generated by trading in her brokerage account.
The U.S. Attorney’s Office for the District of Massachusetts today also announced parallel criminal charges against Charlie Chen.
The investigation, which is ongoing, has been conducted by David H. London and John McCann of the SEC’s Boston Regional Office and Michele T. Perillo of the Market Abuse Unit. The matter was supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Massachusetts, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.
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