UPDATE 4-Bristol-Myers executive charged with insider trading

Thu Aug 2, 2012 5:05pm EDT

* Robert Ramnarine faces three securities fraud counts

* Defendant accused of buying options in takeover targets

* Bristol-Myers says is cooperating; Ramnarine put on leave

* SEC files civil case, seeks brokerage account freeze

By Jonathan Stempel and Ransdell Pierson

Aug 2 (Reuters) - A Bristol-Myers Squibb Co executive was criminally charged with insider trading, accused of trading options in three companies that the large drugmaker was looking to buy.

Prosecutors said Robert Ramnarine, 45, made $311,361 in illegal profit from August 2010 to July 2012 by buying call options in ZymoGenetics Inc and Pharmasset Inc and call and put options in Amylin Pharmaceuticals Inc, and selling his positions once takeovers were announced.

Ramnarine, who was promoted in July to assistant treasurer for capital markets, was charged with three counts of securities fraud, according to a complaint made public on Thursday by U.S. Attorney Paul Fishman in New Jersey. Each count carries a maximum penalty of 20 years in prison and a $5 million fine.

The U.S. Securities and Exchange Commission filed separate civil fraud charges against Ramnarine, and seeks both to recover illegal profit and to freeze the East Brunswick, New Jersey, resident's brokerage account assets.

Ramnarine was released on $250,000 bond at an afternoon hearing before U.S. Magistrate Judge Madeline Cox Arleo in the federal court in Newark, New Jersey, a spokesman for the U.S. Attorney said.

It is unclear whether Ramnarine has hired a lawyer for his defense. Peter Carter, an assistant federal public defender who represented him at the hearing, did not immediately respond to a request for comment.

Ken Dominski, a Bristol-Myers spokesman, said the New York-based company is cooperating with the government and has put Ramnarine on administrative leave. "Bristol-Myers Squibb has clear and strict policies prohibiting trading on material non-public information," he said.

RESEARCHING INSIDER TRADING

According to the complaint, Ramnarine learned confidential information about potential takeovers while working as a director and later as an executive director in Bristol-Myers' pension and savings investments office in Princeton, New Jersey.

The complaint suggested that Ramnarine was concerned about his activities, saying that before buying the Pharmasset options, he had conducted several Internet searches on Yahoo from his office concerning detection of insider trading.

These searches included "can option be traced to purchaser" and "insider trading options traceillegal (sic)," and included a review of an August 2005 SEC press release over alleged insider trading in Reebok International Ltd call options.

Bristol-Myers bought ZymoGenetics for $885 million in October 2010. It expects to complete its $5.3 billion purchase of Amylin this month.

Gilead Sciences Inc agreed in November to buy Pharmasset after Bristol-Myers dropped out of talks. Gilead completed the $11 billion acquisition in January.

Federal prosecutors have in the last few years been cracking down on insider trading.

Fishman's office in June won a record 12-year prison term for lawyer Matthew Kluger over a $37 million scheme, while U.S. Attorney Preet Bharara in Manhattan in the last 15 months won convictions of Galleon Group hedge fund founder Raj Rajaratnam and former McKinsey & Co consulting firm chief Rajat Gupta.

The criminal case is U.S. v. Ramnarine, U.S. District Court, District of New Jersey, No. 12-md-08121.

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