Litigation: SEC Vs. Sean Wygovsky, Christopher Matthaei

Targeted News Service

WASHINGTON, April 1 -- The Securities and Exchange Commission issued the following litigation release (No. 2:23-CV-01810; District of New Jersey, Complaint filed March 30, 2023) involving Sean Wygovsky and Christopher Matthaei:

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SEC Charges Hedge Fund Trader and Broker-Dealer Partner in Multi-Million Dollar Spac Insider Trading Scheme

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The Securities and Exchange Commission filed insider trading charges against Sean Wygovsky, a former trader at a Canadian asset management firm, and Christopher Matthaei, a former partner at a U.S. broker-dealer, for using nonpublic information in advance of at least seven merger announcements involving Special Purpose Acquisition Companies (SPACs) to earn illicit profits of more than $3.4 million.

The SEC's complaint alleges that Wygovsky learned material non-public information about upcoming SPAC mergers from his employer's involvement in transactions related to the mergers. The complaint further alleges that, from May 2020 through April 2021, Wygovsky used encrypted messaging to tip his close friend and trading client, Matthaei, about the upcoming mergers. According to the complaint, Matthaei, who ran a trading and research group focused on SPACs during the relevant period, allegedly traded on Wygovsky's tips.

The SEC's complaint, filed in the United States District Court for the District of New Jersey, charges Wygovsky and Matthaei with violating the antifraud provisions of the federal securities laws and seeks permanent injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against Matthaei and Wygovsky, and an officer and director bar against Matthaei. Wygovsky has consented to a bifurcated settlement, subject to court approval, under which he will be permanently enjoined from violating the federal securities laws. The SEC previously charged Wygovsky with perpetrating a lucrative front running scheme, and Wygovsky consented to a bifurcated settlement in that matter as well.

In a parallel action, the U.S. Attorney's Office for the District of New Jersey announced criminal charges against Matthaei.

The SEC's investigation, which is ongoing, was conducted by Kevin E. Levenberg and Brian R. Higgins of the Philadelphia Regional Office, with assistance by John S. Rymas of the Market Abuse Unit. It was supervised by Brendan P. McGlynn, Scott A. Thompson, and Mr. Grippo. The litigation will be led by Karen M. Klotz and Gregory Bockin. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.