A man from Florida pleaded guilty to trading confidential information about the $11 billion acquisition plans of Gilead Sciences Inc. to Pharmasset Inc. The said man received tip from a friend, who was a broker from Morgan Stanley.
According to Reuters, Jay Fung, 42 years old admitted to conspiracy to commit securities fraud on Wednesday before U.S. District Judge Anne E. Thompson at his trial in Trenton federal court in New Jersey. As part of his plea agreement, the defendant from Delray Beach accepted the agreement to repay over $760,000 of illegal profit and interest as settlement. It is in connection to the filed civil complaint of the U.S. Securities and Exchange Commission.
In September 2013, Kevin Dowd, the former Morgan Stanley broker has pleaded guilty as well to criminal conspiracy charge and paid settlement to the U.S. Securities and Exchange Commission, Yahoo News reported. On November 2011, Dowd told his friend, Fung regarding the Gilead's mergers plans with Pharmasset, three days prior to its announcement.
The information prompted Fung to buy Pharmasset stock and pass on the tip to another investor who bought Pharmasset call options, also betting the stock would rise, the prosecutor stated. Dowd received kickbacks from Fung for the tip.
Fung faces to a maximum five years of imprisonment and was ordered to pay a fine of $250,00 or more than the profit he earned illegally from his offense, United States Department of Justice site cited. His sentencing is scheduled for the 20th of June this year. Dowd was sentenced to probation in his criminal case in April 2014, according to the court resords. His representing lawyer declined to comment on Wednesday.
In 2011, the two makers of antiviral drugs, Gilead and Pharmasset announced that Pharmasset, Gilead and Royal Merger Sub Inc., a wholly-owned subsidiary of Gilead "Merger Sub", had signed a definitive merger $11.2 billion agreement. Gilead is based in Foster City, California.
