Dighton police chief, 4 others charged in unlawful trading scheme
DIGHTON, Mass. (WPRI) — The U.S. Securities and Exchange Commission (SEC) has filed insider trading charges against five men, including Dighton Police Chief Shawn Cronin, following an investigation into Alexion Pharmaceuticals’ acquisition of Portola Pharmaceuticals more than three years ago.
In a complaint filed Thursday, the SEC claims Alexion Vice President Joseph Dupont, who’s also a reserve officer with the Dighton Police Department, knowingly told Cronin confidential details regarding the Portola deal.
Cronin brought that information to two of his friends, identified by the SEC as Jarett Mendoza and Stanley Kaplan, who in turn advised the police chief on trading strategies.
Kaplan would later tell his colleague Paul Feldman about the acquisition, according to the SEC.
The four men went on to invest in Portola stock before the deal was finalized. The SEC said Kaplan and Feldman alerted relatives and friends to the acquisition, several of whom also purchased Portola stock prior to the announcement.
(Courtesy: SEC)
Portola’s stock price increased by more than 130% the day the deal went public.
The SEC said the four men received more than $2.3 million in ill-gotten gains, and tipped others who realized more than $1.7 million in trading profits.
In total, the SEC said Cronin received $72,000, Mendoza got $39,000, Kaplan secured $472,000, and Feldman netted $1.73 million.
Upon realizing their profits, Kaplan reportedly texted Feldman in Russian: “Let’s hope our golden goose will continue laying golden eggs!”
“This case shows our continuing commitment to rooting out those who cheat the system by misusing material nonpublic information,” SEC New York Associate Director Thomas Smith said. “These traders made millions of dollars by exploiting information about an upcoming merger that was supposed to have been held in strict confidence.”
The SEC has charged Dupont, Cronin, Mendoza, Kaplan and Feldman with violating the antifraud and tender offer provisions of federal securities laws. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest and civil penalties, as well as officer and director bars against all five men.
The U.S. Department of Justice also filed charges against all five men, who immediately surrendered to authorities:
Dupont has been charged with one count of Title 15 securities fraud and one count of tender offer fraud.
Cronin has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud.
Kaplan has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud.
Feldman has been charged with has been charged with six counts of securities fraud under Title 15 and six counts of tender offer fraud.
Mendoza was initially charged, but pleaded guilty pursuant to a cooperation agreement.
The Dighton Board of Selectmen voted to place Cronin on paid administrative leave pending the outcome of an internal investigation. The board chose Sgt. George Nichols to serve as acting chief in the meantime.
Shortly after being named acting police chief, Selectmen Chairman Peter Caron said Nichols suspended Dupont.
The investigation into the scheme is ongoing and it’s unclear whether any additional charges will be filed.
Source: WPRI.com
