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Christopher Matthaei, 44, of Brielle, was arraigned in federal court on Wednesday, July 17, New Jersey's U.S. Attorney Philip Sellinger said in a news release. A federal grand jury indicted him on Friday, June 21 for two counts of securities fraud conspiracy and seven counts of securities fraud.
According to court documents and statements, Matthaei was a partner and senior salesperson at a trading firm based in Charlotte, North Carolina, that had offices in Red Bank. Prosecutors said between May 2020 and February 2021, Matthaei illegally traded used private information he received from Sean Wygovsky, a friend who worked at a large Canadian asset management firm.
The insider information was about special purpose acquisition companies engaged in confidential merger negotiations. Wygovsky received private information every time a company was put on his firm’s confidential restricted list.
Wygovsky and his firm's employees were prevented from buying or selling securities of companies on that list, either personally or through another party.
"Despite knowing about these trading restrictions, Wygovsky shared the [material, non-public information] with Matthaei, who then purchased securities in the [special purpose acquisition companies] using his personal brokerage accounts," said Sellinger.
Wygovsky pleaded guilty to securities fraud on Monday, May 25, 2020. The next month, Matthaei bought a private plane and a vacation with Wygovsky, bringing their families to a luxury resort on the Caribbean island of St. Barts where the two continued their insider trading scheme.
Matthaei made about $3.4 million in illegal trading profits. The U.S. Securities and Exchange Commission previously filed a civil complaint against him in the case.
Sellinger also said Matthaei faces up to 25 years in prison and a $5 million fine if convicted.
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