the securities and exchange commission sec on thursday brought insider trading charges against two individuals for allegedly using nonpublic information to profit from at least seven merger announcements involving special purpose acquisition companies spacs what happened sean wygovsky a former trader at a canadian asset management firm and christopher matthaei a former partner at a us brokerdealer earned illicit profits of over 34 million through illegal trading activities according to the complaint filed by the sec wygovsky allegedly learned material nonpublic information about upcoming spac mergers through his employer’s involvement in financing transactions related to the mergers he then used the encrypted messaging service telegram to tip off his close friend and trading client matthaei about the upcoming mergers 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 accuses the defendants of abusing their positions as industry professionals to repeatedly trade inside information and profit from it in the active spac market read also gensler urges congress to increase funding for sec to investigate cryptocurrency issues “it is especially disappointing to see a trader and a brokerdealer resort to tactics like using encrypted communications to flaunt the rules designed to protect investors and the markets” said nicholas grippo director of the sec’s philadelphia regional office the sec is seeking permanent injunctive relief disgorgement of illgotten gains prejudgment interest and civil penalties against matthaei and wygovsky and an officer and director bar against matthaei wygovsky consented to a legal agreement where he will be permanently banned from breaking any laws related to buying and selling stocks however the court still needs to approve the agreement in a parallel action the us attorney’s office for the district of new jersey announced criminal charges against matthaei the companies the pair traded on include   healthcare merger corp which merged with soc telemed in 2020 then went private in 2022 read next chamath palihapitiya says spacs were fueled by a moment in time of just enormous liquidity whats next for private companies