Hedge Fund Managers and an Ex-Government Official Face SEC Charges
The U.S. Securities and Exchange Commission has filed insider trading charges in a $32M insider trading scam. According to the regulator, hedge fund manager Sanjay Valvani unlawfully made almost $32M in profits for hedge funds that invested in healthcare securities because he was privy to insider tips given to him by Gordon Johnston, who used to work at the Food and Drug Administration.
Johnston was no longer at the FDA when he purportedly gave Valvani the insider information, he but still had ties with former colleagues who worked there. He had gone on to work for a trade association that represents generic drug distributors and manufacturers but hid that he also worked as a hedge fund consultant and had access to confidential information about expected FDA approvals for certain companies to be able to make enoxaparin, which is generic drug that helps stop blood clots from forming.
Valvani would then trade before announcements about these approvals became public. The SEC further contends that he would share his tips with hedge fund manager Christopher Plaford, who purportedly made about $300K by insider trading in hedge funds. Plaford also is named in a separate insider trading case.
Pharmaceutical Employee and Broker Accused of Insider Trading
The SEC says that two Rhode Island men made about $448K in illegal profits for themselves and others while insider trading in the stocks of certain pharmaceutical companies. Michael J. Maciocio, who used to work as a planner for Pfizer, used his access to confidential business and clinical information about other pharmaceutical firms that his former employer was thinking of acquiring, or of becoming involved in business relationships with, to trade in the other companies’ stocks.
Maciocio made about $116K from insider trading. He is accused of sharing this nonconfidential information with David B. Hobson, a former Oppenheimer (OPY) and Royal Bank of Canada (RY) broker. The SEC claims that Hobson illegally made $187K for himself and $145K for his customers.
The SEC contends that the two men’s insider trading scam went on for a number of years.
Prosecutors have filed a parallel criminal case against Hobson and Maciocio, who have been friends since childhood. According to Bloomberg, Maciocio has been talking in secret with federal authorities and implicated Hobson while trying to come up with a deal for himself. Maciocio pleaded guilty to four criminal counts last month.
Hobson, who is charged with two counts of securities fraud and two counts of conspiracy, pleaded not guilty to the criminal charges.
Four Friends Accused of Making Over $500K Using Illegal Tip
Former SAP America global VP Christopher Sallis and three of his friends are accused of illegally cashing in on an illegal tip about an upcoming merger between SAP and Concur Technologies. According to the SEC, Salis was given at least $10.4K in kickbacks for sharing the insider information with Douglas Miller, who purportedly shared the information with his brother Edward Miller and friend Barret Biehl. Miller and his family later gave Salis’s startup venture about $80K.
The men set up brokerage accounts to make high-risk, short-term trades in Concur call options so that they could profit when news of the deal went public. Douglas is also accused of placing trades in the account of another friend and in an account belonging to his parents.
The SEC also has inked him and Salis to suspect trades that took place before a tender offer for Business Objects, where the latter was employed at the time. The SEC alleges that they made over $42K in illegal profits.
Read the SEC Complaint against Maciocio and Hobson (PDF)
Little League Friends Divided Over Insider Trading Charges, Bloomberg, June 3, 2016
Software Executive and Three Friends Charged With Insider Trading, SEC, June 16, 2016