Bristol-Myers Squibb Co. (BMY:US) executive Robert Ramnarine was charged with insider trading for making $311,361 in illegal profit by buying stock options in three companies targeted for acquisition.
The FBI arrested Ramnarine, 45, and he appeared today in federal court in Newark, New Jersey, where he was released on $250,000 bond. Ramnarine’s jobs included executive director of pensions and savings investments and assistant treasurer for capital markets.
He helped the New York-based drugmaker evaluate whether to buy targeted companies, including ZymoGenetics Inc., Pharmasset Inc. and Amylin Pharmaceuticals Inc. (AMLN:US), the Federal Bureau of Investigation said. As he conducted due diligence on pension and savings plans of those companies, he also bought options in all three, violating his duty not to profit from inside information, according to the FBI.
From his office in Princeton, New Jersey, Ramnarine also conducted Internet searches to determine whether he could be detected by authorities, according to the Securities and Exchange Commission, which sued him today. One search was on the term “can stock option be traced to purchase inside trading,” according to the civil complaint.
Research on SEC
“Ramnarine tried to educate himself about how the SEC investigates insider trading so he could avoid detection,” Daniel M. Hawke, chief of the SEC’s Market Abuse Unit, said in a statement. “Our charges against Ramnarine should serve notice that when you violate insider trading laws, no matter how you scheme, you will be caught.”
Ramnarine, of East Brunswick, New Jersey, faces three counts of securities fraud, each carrying a maximum prison term of 20 years. The SEC seeks a court order to freeze his brokerage account assets.
After Ramnarine’s court appearance, Peter Carter, his assistant federal public defender, declined to comment.
Bristol-Myers said Ramnarine was placed on administrative leave effective immediately.
“Bristol-Myers Squibb has clear and strict policies prohibiting trading on material nonpublic information and is cooperating with the government’s investigation,” Ken Dominski, a company spokesman, said in an e-mail.
Bristol-Myers agreed to buy ZymoGenetics in October 2010 and Amylin in June. It withdrew from talks on buying Pharmasset, which Gilead Sciences Inc. agreed to buy in November 2011 for $11 billion.
Bristol-Myers fell the most in more than 10 years after it announced late yesterday that a patient in a clinical trial for its experimental hepatitis C drug had developed heart failure. The company halted testing of the drug.
Shares fell 8.6 percent to $32.55 at 4 p.m. New York time, after gaining 27 percent in the previous 12 months. It was their worst one-day drop since April 2002.
Bristol-Myers has been acquiring companies and developing drugs to replace top-selling heart drug Plavix, which had $7.09 billion in sales last year. Bristol-Myers agreed to pay $5.3 billion for Amylin, and agreed to pay $885 million for ZymoGenetics.
Bristol-Myers reached a tentative agreement to buy ZymoGenetics on Aug. 12, 2010, triggering three weeks of due diligence, according to the FBI complaint.
Ramnarine bought ZymoGenetics options on Aug. 25 and 26, 2010, and sold on Sept. 8, the day after the deal was announced, for a profit of $30,551, according to the FBI. In an application for one brokerage account used for those trades, Ramnarine falsely stated that he worked at Merck & Co., the FBI said.
Ramnarine was hired in December 1997 and worked from March 2008 to June 2011 as director of pensions and savings investments. He was then promoted to executive director in that office. In July, he was promoted again, to assistant treasurer for capital markets.
Advising on Amylin
In April, he was responsible for advising Bristol-Myers on how the Amylin transaction would affect the company’s capital structure, cash flow and credit rating, according to the FBI. He also spoke with the company’s investment bankers at Citigroup Inc. and credit agencies. Ramnarine made $55,784 in illicit profit on the deal, according to the FBI.
He also made $225,026 in illicit profit on the Pharmasset deal, buying some of his options on his work-issued BlackBerry, according to the arrest complaint.
The case is U.S. v. Ramnarine, 12-mj-8121, U.S. District Court, District of New Jersey (Newark).
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