Broker-Dealer Partner Indicted in $3.4M Insider Trading

Former Partner at Broker-Dealer Firm Indicted for Role in $3.4 Million Insider Trading Scheme.Photo byMorristown Minute

Christopher Matthaei Arraigned on Multiple Securities Fraud Charges

NEWARK, N.J. – Christopher Matthaei, a former partner at a New Jersey broker-dealer firm, has been arraigned on charges related to an insider trading scheme that allegedly generated millions of dollars in illegal profits.

U.S. Attorney Philip R. Sellinger announced the arraignment, which took place on July 17, 2024, before U.S. District Judge Georgette Castner in Trenton federal court. Matthaei, 44, of Brielle, New Jersey, was indicted by a federal grand jury on June 21, 2024, on two counts of securities fraud conspiracy and seven counts of securities fraud.

Details of the Scheme

According to court documents and statements made during the arraignment:

• Matthaei was a partner and senior salesperson at a broker-dealer based in Charlotte, North Carolina, with offices in Red Bank, New Jersey.
• From May 2020 through February 2021, he allegedly traded on material, non-public information (MNPI) obtained from Sean Wygovsky, a conspirator and friend employed at a large Canadian asset management firm.
• The MNPI pertained to Special Purpose Acquisition Companies (SPACs) involved in confidential merger negotiations, shared with the asset management firm as a potential investor.
• Wygovsky received this information whenever a SPAC was placed on his firm’s confidential restricted list, prohibiting employees from trading the SPACs’ securities.
• Despite the trading restrictions, Wygovsky shared the MNPI with Matthaei, who then purchased securities in the SPACs using his personal brokerage accounts.
• In June 2020, Matthaei funded a private plane and an extended trip with Wygovsky and their families to a luxury resort in St. Barts, where they continued the insider trading activities.
• Matthaei allegedly made approximately $3.4 million in illegal trading profits from this scheme.

Wygovsky pleaded guilty to securities fraud on May 25, 2023, before Judge Castner, in connection with the same insider trading scheme.

Potential Penalties

• Securities Fraud Conspiracy (Count One): Maximum potential penalty of five years in prison and a $250,000 fine.
• Securities Fraud (Counts Two through Seven): Each count carries a maximum potential penalty of 20 years in prison and a $5 million fine.
• Securities Fraud (Count Eight) and Securities Fraud Conspiracy (Count Nine): Each count carries a maximum potential penalty of 25 years in prison and a $250,000 fine.

The U.S. Securities and Exchange Commission (SEC) has also filed a civil complaint against Matthaei based on the same conduct.

Investigation and Acknowledgments

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Special Agent in Charge James E. Dennehy in Newark, for their investigation leading to the indictment.

The government’s case is being handled by Assistant U.S. Attorneys Jennifer Kozar and Shontae D. Gray of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charges and allegations in the indictment are merely accusations, and Matthaei is presumed innocent unless and until proven guilty.

This case highlights the commitment of federal authorities to combat securities fraud and ensure the integrity of financial markets.

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