Insider trading may seem like an easy bet to some, but it’s a dumb way to lose if you get caught.
On Thursday, federal prosecutors in Manhattan announced four separate, head-scratching busts of people for allegedly trading on inside information in ways so brazen that it would have been amazing if they hadn’t been caught.
“Insider trading is not a quick buck. It’s not easy money. It’s not a sure thing. It’s cheating. It’s a bad bet. It’s a ticket to prison,” said Damian Williams, the U.S. attorney in Manhattan.
Here are some of the eye-popping details contained in the indictments announced on Thursday, in which more than $30 million in illegal profits were made:
COVID corruption
Prosecutors say Amit Dagar, an employee of Pfizer Inc.
PFE,
who helped manage data analysis for certain clinical drug trials, tried to reap some profit for himself when he laid eyes on inside information about the success of Paxlovid, a drug used to treat COVID-19.
They say he learned about the drug’s successful trial in November 2021, just a day before Pfizer was set to announce the results publicly.
So Dagar, 44, of Hillsborough, N.J., allegedly began buying up short-dated, out-of-the-money call options in Pfizer stock and then called his pal, Atul Bhiwapurkar, and told him to buy the same. Bhiwapurkar, 45, of Milpitas, Calif., allegedly passed the same info on to another friend.
After Pfizer released the results of the drug’s trial, the company’s stock jumped 10%. Over the next few weeks, prosecutors say Dagar, Bhiwapurkar and his friend all sold their call options, making a total profit of $350,000.
Both men were arrested Thursday morning and couldn’t immediately be reached for comment. It was not immediately clear if they had retained attorneys.
Bad boyfriend
This guy won’t win any boyfriend-of-the-year awards.
Prosecutors say Spartan Capital Securities broker, Jordan Meadow, 34, made over $5 million in trades he made based on inside information he got from a friend who had secretly stolen it from the laptop of his girlfriend. The girlfriend worked as an executive assistant at a major bank.
Meadow allegedly gave his pal, Steven Teixeira, high-value items, such as Rolex watches, in exchange for the info.
One deal Meadow managed to score big with, was the $2.2 billion acquisition of Score Media and Gaming Inc. by Penn National Gaming, Inc.
PENN,
in July 2021, according to court filings. Prosecutors say Meadow bought hundreds of call options himself and shared the info with a colleague at his brokerage firm, their clients and a friend.
In all, they made $5 million in illicit profits, prosecutors said.
Meadow, of Warren, N.J., was arrested on Thursday. Messages left with Meadow’s attorney and an attorney for Spartan Capital, weren’t immediately returned. Prosecutors say Teixeira had pleaded guilty as part of a cooperation agreement.
Truthiness
The truth is this is illegal.
Federal prosecutors hit three Florida men with insider trading charges related to Donald Trump’s Truth Social media platform’s deal to merge with a special purpose acquisition company, allegedly earning them close to $23 million in illegal profits.
Investor Bruce Garelick, of Fort Lauderdale, became a board member for the Digital World Acquisition Company
DWAC,
a SPAC, or so-called blank check company, ahead of the announcement that it was planning to merge with the Trump Media & Technology Group Corp.
Prosecutors say Garelick, who was also the chief strategy officer at Rocket One Capital, LLC in Miami, used his position on the board to funnel insider information on the impending merger to his boss, Michael Shvartsman, 52, of Sunny Isles Beach, calling it “intelligence.”
Shvartsman, a former-nightclub proprietor who founded Rocket Capital in 2013, then allegedly passed the info on to his brother, Gerald Shvartsman, and the two began buying up DWAC shares.
Prosecutors say that the three men also passed on the insider information to friends on a trip to Las Vegas, to Michael Shvartsman’s neighbors and to Gerald Shvartsman’s employees at a furniture supply store he owned.
Shortly after the merger deal between DWAC and Trump’s group was announced in October 2021, shares rose from just $10 to as high as $175. Prosecutors say Garelick and the Shvartsmans quickly dumped their shares, earning a profit of $22.9 million.
Garelick and the Shvartsmans were arrested on Thursday morning and couldn’t immediately be reached for comment. It wasn’t immediately clear if they had yet retained attorneys.
A cop out
If anyone knew this was illegal, it should have been this guy.
Prosecutors say a group of childhood pals — one of whom was the chief of police in a town in Massachusetts — all engaged in an insider-trading scheme around the 2020 acquisition of a pharmaceutical firm that netted them $2.2 million in profit.
The scheme allegedly circled around Joseph Dupont, a vice president at Alexion Pharmaceuticals, Inc., who caught wind of the company’s plan to acquire Portola Pharmaceuticals, Inc. before it was publicly announced.
According to court documents, Dupont passed the info onto his childhood friend, Shawn Cronin, who was a sergeant for the Dighton, Mass., police at the time and would later become the department’s chief. Cronin then allegedly purchased out-of-the-money call options for Portola stock.
Cronin then allegedly shared the tip with Jarett Mendoza, another childhood friend, as well as Slava Kaplan, who was also a friend. Kaplan then allegedly passed the info on to his friend, Paul Feldman, who shared it with others, prosecutors said.
All of the men allegedly purchased call options for Portola stock and reaped millions in profit when the deal was eventually announced.
Dupont, Cronin, Kaplan and Feldman were also taken into custody on Thursday and couldn’t immediately be reached. It wasn’t immediately clear if they had retained attorneys. Mendoza pleaded guilty after agreeing to cooperate, prosecutors said.