US Attorney Philip R. Sellinger said a former New Jersey stockbroker was charged with allegedly making more than $3 million in profits from insider trading.
Christopher Matthaei, 44, of Brielle, who was then employed as a partner and senior salesman at a broker-dealer firm, was charged Thursday with a complaint of conspiracy to commit securities fraud and securities fraud, prosecutors said.
Matthaei traded Special Acquisition Companies, or SPACS for short, based on non-public information he received from a friend who was employed by a Canadian asset management firm, according to a criminal complaint.
The Securities and Exchange Commission defines a SPAC as a shell company conducting an initial public offering with no operations. Its sole purpose, according to the Commission, is to identify a target operating company before organizing a merger.
Matthaei reportedly initiated the deals between May 2020 and February 2021 and made a profit of about $3.4 million, authorities said.
The defendant’s conspirator received information about confidential merger negotiations because his company was a potential investor in the SPAC deals, the complaint said. The conspirator notified Matthaei when a security was added to his company’s confidential blacklist, and Matthaei then bought the securities through his personal brokerage account, officials allege.
Matthaei also paid for a luxury trip to Saint Barthélemy with the conspirator and his families, where they continued to be involved in the plan, according to court documents.
“Christopher Matthaei has been alleged to have illegally exploited his relationship with a close friend to gain access to confidential information regarding undisclosed mergers and acquisitions involving special purpose acquisition companies, or SPACs,” US Attorney Sellinger said. “Matthaei is said to have done business with seven SPACs, earning him $3.4 million in illicit profits. SPACs may have been a hot trend on Wall Street, but the District of New Jersey will continue to tirelessly take insider traders to court, regardless of market trends.”
The SEC also filed a civil complaint against the defendant on Thursday.
Matthaei’s attorneys, James Lundy and Christopher DeGennaro of Foley & Lardner LLP, did not immediately respond to requests for comment Thursday night.
Matthaei appeared before a federal court judge in Newark after his arrest Thursday and was released on $250,000 unsecured bail, U.S. attorneys said.
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Nicolas Fernandes can be reached at [email protected].