U.S. News

Florida man gets prison for trading on tip about Gilead deal

(Reuters) - A Florida man was sentenced on Wednesday to one year in prison for engaging in insider trading based on a tip he received from an ex-Morgan Stanley broker about Gilead Sciences Inc’s planned $11.2 billion purchase of Pharmasset Inc in 2011, prosecutors said.

Jay Fung, of Delray Beach, was sentenced by U.S. District Judge Anne Thompson in Trenton, New Jersey, after pleading guilty in March 2016 to conspiracy to commit securities fraud, prosecutors said.

The judge also ordered Fung to pay a $2,000 fine, according to court records. He had already forfeited $345,245, according to the office of U.S. Attorney Craig Carpenito.

The former Morgan Stanley broker, Kevin Dowd, pleaded guilty in September 2013 to a criminal conspiracy charge, and has also settled with the U.S. Securities and Exchange Commission. He was sentenced in 2014 to probation.

A lawyer for Fung did not immediately respond to a request for comment.

Prosecutors said that in November 2011, Dowd learned through his work that Pharmasset was going to be sold to Gilead and passed the inside information on to his friend Fung, who then bought Pharmasset call options and shares.

Foster City, California-based Gilead announced the deal later that month. The deal valued Princeton, New Jersey-based Pharmasset at a roughly 89 percent premium over its share price at the time.

After the deal involving the two makers of antiviral drugs was announced, Fund sold the Pharmasset shares and options he bought, making a more than $250,000 profit in the process, prosecutors said.

They said that Fund later gave Dowd a $35,000 check in exchange for the inside information.

Reporting by Nate Raymond in Boston; Editing by Tom Brown