SEC Charges Former Pharma Company Accountant with Insider Trading

By Scutify  SEP 15, 2017 11:54 AM


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The Securities and Exchange Commission (SEC) has charged a former pharma company accountant and three other individuals with insider trading. The accountant allegedly provided market-moving news related to the New Jersey-based company.

A 28-year-old man from Yardley, PA, Daniel Perez, was charged with one count of conspiracy to commit securities fraud. Evan Kita, 27 years old and also of Yardley, had previously plead guilty to one count of securities fraud and charges of conspiracy to commit securities fraud. Kita worked as an accountant at Celator Pharmaceuticals Inc. (CPXX).

The SEC's complaint alleges that Kita shared confidential information with two friends regarding the clinical results of the company's cancer drug. Kita allegedly also shared information about Celator's acquisition by Jazz Pharmaceuticals Plc, a Dublin-based company.

Celator's stock climbed 400% in March of last year after announcing the positive results of its leukemia drug. Jazz Pharmaceuticals offered to pay a high premium to acquire Celator.

According to the SEC's complaint, Richard Yu, a friend of Kita's, and Daniel Perez purchased company stock based on this insider information and agreed to share the trading profits. Richard Yu allegedly passed this information to his father, who also traded ahead of the announcements.

Yu's father allegedly made $347,327 in illegal profits from the information.

Kita attempted to get away with the crime by sharing the information with Yu and Perez through an encrypted smartphone app.

"Get your ducks in line on your end," Kita allegedly told Perez through the app, referring to the acquisition by Jazz Pharmaceuticals.

According to a report from CFO, Kita's information realized $411,000 in illegal profits. Kita has admitted that the profits from his insider trading scheme was between $250,000 and $550,000, according to the U.S. Attorney.

"The investing public relies on accountants and other gatekeepers to safeguard confidential information, not use it for personal profit," said Kelly L. Gibson, associate director of the SEC's Philadelphia Regional Office, in a press release. "When gatekeepers violate that public trust as Kita allegedly did, the SEC is committed to holding them accountable."

The conspiracy to commit securities fraud carries a penalty of up to five years in prison and a $250,000 fine. The securities fraud count that Kita faces also comes with a penalty of up to 20 years in prison and a $5 million fine.

"Fraud can happen to or within any organization," says Jack + CO, a Minnesota-based accounting firm. "And any instance of fraud has the potential to be devastating."

Kita will be sentenced in December.

This article was written by Adam Monson for on .

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