SEC, USAO Bring Insider Trading Charges Against 7 Individuals

SEC, USAO Bring Insider Trading Charges Against 7 Individuals

The SEC and the U.S. Attorney's Office, New Jersey, brought civil and criminal insider trading charges against, respectively, six and seven individuals based on a five year insider trading ring that garnered over $1.4 million in illegal profits. Three of the individuals are executives at pharmaceutical companies. Several been friends since high school. Overall there were ten tippees At the center of the trading was four take-over transaction and six earnings releases which spawned trading tracing to 2007 and continuing through mid-2012. Elaborate steps were taken to conceal the trading. Those steps failed. SEC v. Lazorchak, Case No. 2:12-cv-07164 (D.N.J. Filed Nov. 19, 2012).

The Commission's complaint named as defendants: John Lazorchak, Director of Financial Reporting at pharmaceutical company Celgene Corporation; Mark Cupo, Director of Accounting at Sanofi-Aventis Corporation, another pharmaceutical company and a former co-worker of Mr. Lazorchak; Mark Foldy, employed in the marketing department at a third pharmaceutical company, Styker Corporation; Michael Castelli, a friend of defendant Cupo; Lawrence Grum, who holds a brokers license and attended high school with defendant Castelli; Michael Pendolino; and James Deprado who is not named as a defendant in the criminal case. Defendants Larzorchak, Pendolino, Foldy and Deprado attended the same high school.

The ring is alleged to have traded on inside information in advance of four corporate take-over announcements.

Click here to read the entire post.

For more cutting edge commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

For more information about LexisNexis products and solutions connect with us through our corporate site.