Friends Accused of Trading on Data for Edgar Face Widening Probe

(Bloomberg) -- The FBI had to move fast when agents learned that two men who were the focus on an insider trading investigation were about to get on a flight to Hong Kong.  

Before they could board the early morning June 28 flight, federal agents arrested Justin Chen, 31, and Jun Zhen, 29. Prosecutors say they pocketed at least $1 million by taking information they learned from their job at a private company that formats materials before they are submitted to the Securities and Exchange Commission’s Edgar filing system.

At a pair of court hearings, prosecutors said that they were aware of at least four companies where the two men allegedly made trades based on non-public information. But officials were investigating whether Chen and Zhen traded in at least six more companies when they were arrested, hours before getting on the Cathay Pacific flight to Hong Kong.

“We probably wouldn’t have arrested the defendants at this point as the investigation is ongoing,” Nicholas Axelrod, an assistant US attorney, said at one of the hearings. “If not for that travel.”

The arrests spotlight ongoing problems with how confidential information can be obtained by insiders before it’s publicly released on the Edgar database, the SEC’s online portal for more than 30 years. In 2021, the SEC brought enforcement cases against several people who they accused of hacking into third-party companies that dealt with Edgar system. 

Chen was an Edgar assistant manager and Zhen was a typeset assistant manager at New York-based EdgarAgents.com. Companies like EdgarAgents help prepare company filings before they are sent to the Edgar system and distributed to the public.

Between March and June 2025, prosecutors say the two obtained material, nonpublic information ahead of announcements like mergers “that resulted in significant increases in the share price of each company’s stock.”

Brazen Scheme

“This was an incredibly brazen scheme,”Axelrod told a federal magistrate in Brooklyn, New York, on Monday. “They traded on the information and they traded aggressively.”

Lawyers for both men declined to comment on the charges. Neither man has entered a plea at this point in the proceedings.

Chen, who prosecutors say made $100,000 a year, had worked at the company since 2020 and had been working at firms that handled Edgar data since 2012, according to his LinkedIn profile. His sister also worked at the company.

Prosecutors say that the two men had accessed proposed filings on at least four companies before the information was public; Ondas Holdings Inc., Purple Innovation Inc., Signing Day Sports Inc. and SigmaTron International Inc.

In one example, prosecutors say Chen and Zhen both bought tens of thousands of shares of Ondas Holdings just before the company released an SEC 8-K form disclosing that it had entered into a strategic partnership with Palantir, a multibillion-provider of artificial intelligence service. They made about $36,749 in the 24-hour period before and after the announcement.

EdgarAgents Chief Executive Officer Stephen Bonventre said the company was cooperating with the US investigation and that both men were no longer with the company.

“The alleged activities run completely counter to our company values and the integrity with which we’ve built our business,” he said in a statement. 

The SEC declined to comment on the case, though Axelrod said in court that the agency told prosecutors they detected suspicious trading in other companies, which is now part of the government’s ongoing criminal investigation.

At the two court hearings following their arrests, Axelrod portrayed Chen and Zhen as two men on the brink of fleeing the country who shouldn’t be given bail while the case proceeds. 

‘Get Out Quick’

He pointed to a text Chen sent Zhen: “We gotta get out quick.” 

During the hearing on Monday, however, Magistrate Judge Peggy Kuo was skeptical of Axelrod’s argument that Chen’s “we gotta get out quick” message meant the two men were going to flee.

Kuo said that Chen may have meant he needed to “get out” of his trading position rather than getting out of the US.

“I read that as in a flight context,” Axelrod said. “It’s the government’s concern the defendant could flee.”

He cited another text from Chen to Zhen as evidence they had been planning to escape. 

“Give me 2 months to get as much as possible,” the text read, according to Axelrod.

Chen’s lawyer, Charles Millioen, sought to have his client released, arguing that since his passport had been taken, he couldn’t leave the US anyway.

At an initial hearing last week, Zhen’s lawyer, Chris Wright, also said his client wasn’t a flight risk.

“He has every reason to stay in the United States,” Wright said. “His family is here. He’s not a citizen of China, he is an American citizen.”

Chen’s mother wept on Monday as her son sat stoically listening to the government’s allegations. She and Chen’s sister, who called in for the bail hearing, agreed to post $10,000 in cash to win his release.

Kuo said that Chen could be released on a $1 million bond, guaranteed by his mother and sister. 

“Hopefully, that is enough to keep Mr. Chen in the district,” Kuo said.

Chen was released Tuesday. Zhen, whose bail was set at $500,000, remains in custody as of Saturday morning, according to federal Bureau of Prisons records.

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