A Bristol-Myers (NYSE:
BMY
) executive was charged with insider trading Thursday. According to
authorities, Robert Ramnarine is charged with buying options in
three different companies that Bristol-Myers was trying to acquire.
It is illegal to use non-public information for personal gain.
On three different occasions spanning from 2010 to 2012,
Ramnarine bought options on information that Bristol-Myers was
taking over other pharmaceutical companies. After the takeovers
were announced, Ramnarine would sell the options and cash in a
profit for himself.
Ramnarine made more than $300,000 dollars in illegal profits
from stock option trading according to authorities. Specifically,
he made trades on a personal account for the following three
companies Bristol-Myers was trying to acquire: Amylin
Pharmaceuticals (NASDAQ:
AMLN
), Zymogenetics and Pharmasset.
Prior to Bristol-Myers' September 7, 2010 Zymogenetics
acquisition announcement, Ramnarine made $30,551 by trading call
options on the target firm. In addition, he made $225,026 after
selling calls of Pharmasset right after the public announcement of
its sale. Then in 2012, Ramnarine made $55,784 in illegal profits
by trading put and call options prior to Amylin's sale
announcement. All of these purchases were made on non-public
information, which he received from Bristol-Myers.
The executive faces three different securities fraud counts.
Each of these charges carries a maximum penalty of 30 years in
prison and a fine of up to $5 million. The SEC has filed three
separate civil fraud charges against Ramnarine and is looking to
freeze his brokerage account.
Apparently, Ramnarine was skeptical about making the illegal
trades. Ramnarine made internet searches that included the phrase
"can options be traced to buyer" and "illegal insider trading
options trace," according an SEC statement. He also viewed an
article from the SEC website about enforcement on insider trading
prior to an acquisition announcement.
"Ramnarine tried to educate himself about how the SEC
investigates insider trading so he could avoid detection, but
apparently he ignored countless successful SEC enforcement actions
against similarly ill-motivated individuals who paid a heavy price
for their illegal trading," said Daniel M. Hawke, Chief of the SEC
Enforcement Division's Market Abuse Unit in an statement.
Thursday morning, Ramnarine was arrested and taken into custody.
He was set to report in court later on Thursday in New Jersey.
Seperately, Bristol-Myers suspended a treatment for hepatitis C
Thursday because of cardiac concerns. One patient, who was being
treated with the drug, suffered heart failure. Bristol-Myers said
it has not determined if the drug caused the heart failure, but
that the firm is examining all patients.
Thursday afternoon, Bristol-Myers traded down around 8
percent.
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