Two Brooklyn residents on June 27 were charged with participating in an insider trading scheme that exploited early access to company filings, according to federal prosecutors.
Justin Chen and Jun Zhen, both employees at a Manhattan-based financial compliance firm known as Edgar Filer 1, allegedly used confidential information to trade shares in companies just before major announcements that sent stock prices soaring, according to U.S. Attorney’s Office for the Eastern District of New York.
The firm, which specializes in preparing financial filings for companies, had access to sensitive corporate news before it was made public through the SEC’s EDGAR system. Employees like Chen and Zhen were responsible for converting and typesetting these filings before submission.
Prosecutors allege that between March and June 2025, Chen and Zhen repeatedly used their access to trade in advance of announcements from multiple companies. In total, they are accused of earning more than $1.9 million in profits through coordinated trades of four companies: Ondas Holdings, Purple Innovation, SigmaTron International and Signing Day Sports.
Federal investigators say Chen and Zhen’s trading in these four companies followed a similar pattern each time, with purchases happening just hours before the announcements.
Records indicate neither had traded in these stocks previously. Investigators also uncovered evidence suggesting the two coordinated their trades within minutes of each other.
Travel records show Chen and Zhen flew together to Hong Kong in April and planned another trip in June. Data from their brokerage accounts revealed they accessed their accounts from the same Brooklyn IP address on June 2, 2025, even though Chen was overseas at the time, suggesting Zhen accessed both accounts.
Authorities say the firm’s internal policies explicitly banned employees from trading on non-public client information. Despite this, prosecutors allege the pair systematically used early access to enrich themselves.
Both men face charges of securities fraud in connection with the scheme. Federal prosecutors have requested their arrest and asked the court to keep related filings under seal to prevent flight risk and protect the ongoing investigation.
