WASHINGTON—A new arrival to Wall Street and former student-body president at New York University’s Stern School of Business was charged with insider trading tied to a $1.7 billion buyout.

Bill Tsai, a 23-year-old analyst at RBC Capital Markets, was arrested Sunday and charged with criminal securities fraud, according to federal prosecutors in New York. The Securities and Exchange Commission also sued Mr. Tsai Monday on civil claims.

Authorities...