A jury in the U.S. District Court District of Massachusetts returned a verdict in favor of the SEC, finding that a Massachusetts trader made illegal trades using nonpublic information on five separate occasions.

As previously covered, in a Complaint filed in April 2018, the SEC alleged that an individual traded in VistaPrint Securities ("VistaPrint") based on confidential information he learned from a close family friend who worked at the company as a managerial accountant. The friend allegedly had access to material nonpublic information, including information about VistaPrint's quarterly earnings announcements before they became public. According to the SEC, the trader made a series of extremely risky and profitable trades over the course of two years, and made over $800,000 in illegal trading profits.

After a four-day trial, the jury found the trader liable on all counts, finding that he violated the antifraud provisions of the federal securities laws in Section 10(b) of the Exchange Act and Rule 10b5 thereunder, and in Section 17(a) of the Securities Act. In a press release, the SEC stated that it is seeking (i) disgorgement of insider trading profits and (ii) civil penalties of up to three times the trader's ill-gotten gains.


This was a good win for the SEC. Insider trading cases have historically been the most difficult cases for the SEC to win at trial. Here, the SEC prevailed despite the fact that Mr. Chen had been found not guilty of three counts of insider trading based on the same conduct in a criminal trial in March 2019 (he was found guilty on one count of making a materially false statement). While the SEC has a lower burden of proof than the criminal authorities do (preponderance of the evidence compared to beyond a reasonable doubt), the SEC's win at trial on all counts was impressive nonetheless.