NEW YORK/BOSTON (Reuters) - A former hedge fund manager and a pharmaceutical executive have agreed to settle federal insider trading charges related to the 2007 takeover of biotechnology company MedImmune Inc, the U.S. Securities and Exchange Commission said on Wednesday.
Stephen R. Goldfield, 46, who ran the hedge fund firm Imperium Capital Management LLC in Tampa, Florida, was charged with making $13.98 million in illegal profit by trading in MedImmune securities before Britain's AstraZeneca Plc AZN.L agreed on April 23, 2007 to buy MedImmune for more than $15 billion, or $58 per share.
The SEC also accused co-defendant James W. Self Jr, 45, Goldfield’s friend and former Wharton School of Business classmate, of tipping him off about the MedImmune sale process with information he learned as an executive director of business development of a New Jersey pharmaceutical company.
The settlement comes as federal regulators have brought a spate of insider trading cases after facing a wave of criticism for having missed fraud in previous years.
According to the SEC, Goldfield’s settlement was $16.65 million, reflecting the improper profit plus interest. But he will only pay $600,000 because he lost all the illegal profit by aggressively trading index put options. Goldfield did not admit wrongdoing.
“Mr. Goldfield is happy with the settlement and is looking forward to putting the matter behind him,” his lawyer Robert Heim said.
Self accepted a $50,000 civil fine, also without admitting wrongdoing, the SEC said.
The SEC declined to comment further. John Grugan, who represents Self, declined to elaborate on the settlement.
According to the complaint, Goldfield conducted more than 30 trades in MedImmune stock and call options at prices or strike prices ranging from $32.50 to $50.00 per share between March 15 and April 20, 2007, based on nonpublic information that he had learned from Self.
It said Self would call Goldfield on his cellphone, and use phrases such as “the weather was in the 50s” to hint at a takeover price for MedImmune, then trading in the mid-30s.
Pharmaceutical company Merck & Co's MRK.N website lists a James W. Self as an employee in business development at its vaccine division. Merck is based in Whitehouse Station, New Jersey. Merck did not return a call for comment.
Goldfield lives in Odessa, Florida, while Self lives in Doylestown, Pennsylvania, the SEC said.
A number listed for Imperium has been disconnected.
The case is SEC v. Self et al, U.S. District Court, Eastern District of Pennsylvania, No. 10-04430.
Reporting by Jonathan Stempel in New York and Svea Herbst-Bayliss in Boston; editing by John Wallace and Ilaina Jonas
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