A US-based accountant formerly employed by a pharmaceutical company and three others have been charged with insider trading by the US Securities and Exchange Commission (SEC) relating to its acquisition by a Dublin-based competitor
The SEC alleges that Evan Kita, former accountant at Celator Pharmaceuticals based in New Jersey, tipped two of his friends with confidential information about the clinical trial results for Celator’s cancer drug and its acquisition by Dublin-based Jazz Pharmaceuticals almost three months later.
Celator's stock rose more than 400% in March 2016 when it announced positive results for its drug to treat leukaemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator for $1.5bn (£1.16bn).
According to the SEC's complaint, Daniel Perez and Richard Yu purchased Celator stock based on Kita's tips before the two announcements and agreed to share their trading profits with him. The SEC alleges that Yu passed Kita's tips to his father, Chiang Yu, who also traded in advance of both announcements.
To avoid detection, Kita allegedly communicated with Perez and Richard Yu through an encrypted smartphone application.
Kelly Gibson, associate director of the SEC's Philadelphia regional office, said: ‘The investing public relies on accountants and other gatekeepers to safeguard confidential information, not use it for personal profit.
‘When gatekeepers violate that public trust as Kita allegedly did, the SEC is committed to holding them accountable.'
In a parallel action, the US attorney's office for the district of New Jersey has filed criminal charges against Kita, Perez, Richard Yu and Chiang Yu.
Report by Pat Sweet
