Posted: Jul 26, 2022
By Mark Terry
The U.S. Attorney’s Office for the Southern District of New York was busy yesterday, charge nine people on charges related to insider trading. The specific fillers were not related to each other, but some were specific to the biopharmaceutical industry. Read on for more details.
FBI and Merck Intern
A die indictments was of a former FBI trainee, Seth Markin, 31. Markin secretly obtained information from his then-girlfriend, who was a lawyer working on Merckthe acquisition of Pandion Therapeutics. Markin allegedly went through his then-girlfriend’s confidential documents without her permission. Along with co-defendant Brandon Wong, 38, Markin tipped off at least 20 people, who profited from millions of dollars using the information he stole. Markin and Wong made over $1.4 million in profits from their illegal trade.
When questioned by the FBI, Markin claimed he didn’t know his girlfriend was working on the merger and that he heard about the possible deal on social media. Markin and Wong are charged with multiple counts of securities fraud and takeover bid, one charge of conspiracy and other charges.
Markin’s former girlfriend was not named in the indictment. His employer was only mentioned in the documents as a large Washington, DC law firm. Covington & Burling represented Merck in the Pandion deal, which Merck acquired for $1.85 billion. Merck completed acquisition in April 2021.
Daniel Catenacci, former investigator of the first five trials
In January 2021, Dr. Daniel VT Catenacci, MD, director of the gastrointestinal oncology program at the University of Chicago, fees paid with the United States Securities and Exchange Commission for insider trading. In November 2020, Catenacci acquired 8,743 shares of Five Prime Therapeutics, knowing that the company was to publish positive data from a phase II trial of bemarituzumab, a monoclonal antibody to treat gastric cancer. Catenacci was the principal clinical investigator of the trial. A day after acquiring the shares, he sold them for a profit of over $134,000.
On December 20, 2021, Catenacci reached a partial settlement of the civil charges, paying a civil penalty from the proceeds of the negotiation. Around the same time, the U.S. Attorney’s Office for the Northern District of Illinois filed a parallel Justice Department complaint against Catenacci for insider trading securities fraud, to which he pleaded not guilty.
Now, after facing a possible 25-year prison sentence, Catenacci and his lawyer are arguing he shouldn’t go to jail at all, asking for time served plus two years probation. According to documents filed last week, this charge was recommended by the US probation office. Defense attorneys argued that Catenacci “deeply regrets his conduct” and that a non-custodial sentence is “in the public interest” so he can continue working as an oncologist.
Court documents said, “Dr. Catenacci is a first-time offender who immediately accepted responsibility for his conduct, cooperated with the government, and has already met his forfeiture obligation.
In November 2020, Catenacci reportedly received an email from Five Prime’s chief medical officer stating that he could not trade based on the non-public Phase II interim data. Catenacci claimed he hadn’t finished reading the email and believed ‘he shouldn’t share the non-public information he received from Five Prime with others,’ according to court documents. .
Then Five Prime announced the data and Catenacci sold its shares, earning around $134,000 in 24 hours. About six months later, the FBI visited Catenacci, who confessed and promptly wrote a personal check to the U.S. Marshals Service for the amount in question.
Amgen acquired Five Prime in March 2021 for $1.9 billion.
Catenacci maintains that he was unaware at the time that he had broken any laws and that he was a self-taught securities trader. In April, the court denied the motion and Catenacci pleaded guilty.
Judgment is scheduled for August 3.
Former Vice Chairman of Goldman Sachs
Brijesh Goel, former vice chairman of the Goldman Sachs group, was accused with insider trading. He allegedly informed a close friend of confidential information about upcoming mergers and acquisitions related to the bank.
“We’re very interested in sending a message that insider trading is still here, we’re still here, and we’re going to enforce it when we find it,” said Damian Williams, U.S. Attorney for the Southern District of New York.
Goel shared information on several deals involving companies that include Thermo Fisher ScientificT-Mobile US and Walgreens Boots Alliance.