Stryker employee charged in insider trading ring
The SEC has charged 7 people in a wide-ranging insider trading scandal, implicating employees of Stryker ($SYK), Celgene ($CELG) and Sanofi ($SNY) in a complicated scheme the feds say netted $1.7 million in illegal profit.
Prosecutors say the three ringleaders were Mark Foldy, a Stryker marketing employee; John Lazorchak, the director of financial reporting at Celgene; and Mark Cupo, director of accounting and reporting at Sanofi. The feds say the three tipped each other off to impending M&A and regulatory approvals, buying shares or selling the tips among other acquaintances--the SEC, in a moment of apparent organizational levity, calls them "high school buddies."
It all started in 2007, the SEC says, when Lazorchak told Cupo about Celgene's soon-to-be buy of Pharmion. Cupo looped in "a friend with whom he attends winemaking club meetings," according to prosecutors, trading cash for the tip on what became a $2.9 billion acquisition. Foldy got involved later that year, the SEC charges, profiting off the Pharmion tip and alerting his friends of a coming tender offer from Stryker.
The 7 kept the scheme going from there, generating 11 tips and $1.7 million in dividends and kickbacks, the SEC said. Looking to fly under the radar, the team used coded language and track-covering email exchanges, figuring they'd never get caught because "the SEC's got to pick their battle because they have a limited number of people and a huge number of investors to go after," one of the friends allegedly said.
That, of course, proved untrue, and all of the players are facing criminal charges of violating the Securities and Exchange Act.
- read the SEC's release
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