SEC Charges Police Chief, Four Others in Connection with Insider Trading Before Pharmaceutical Merger

The Securities and Exchange Commission today filed insider trading charges against five individuals, including a police chief in Dighton, Massachusetts, arising from trading before the announcement of a tender offer by Alexion Pharmaceuticals Inc. to acquire Portola Pharmaceuticals Inc. in May 2020. Four of the defendants traded on nonpublic information obtained, directly or indirectly, from the fifth defendant, and realized more than $2.3 million in ill-gotten gains and tipped others who realized more than $1.7 million in trading profits.

According to the SEC’s complaint, Joseph Dupont was a vice president and part of the acquisition team at Alexion when he knowingly or recklessly tipped confidential information about the acquisition to his close friend Shawn Cronin, the police chief. Cronin allegedly then provided the information to Jarett Mendoza, another close friend, and to family friend Stanley Kaplan, who provided advice to Cronin on trading strategies. In turn, Kaplan allegedly provided the information to his friend and colleague, Paul Feldman. The SEC’s complaint alleges that Cronin, Mendoza, Kaplan, and Feldman purchased Portola stock and/or out-of-the money call options prior to the announcement, on the basis of the material, nonpublic information they received. The complaint further alleges that Kaplan and Feldman passed the information on to other family members and friends, who profitably traded. On the day of the acquisition announcement, Portola’s stock price increased more than 130 percent.

Source: SEC.gov | SEC Charges Police Chief, Four Others in Connection with Insider Trading Before Pharmaceutical Merger