--Bristol executive allegedly traded options in drug maker's
acquisition targets
--Executive allegedly made more than $300,000 in profits from
trading
--Bristol places executive on leave immediately
(Adds details about SEC charges beginning in second paragraph,
details about executive's Internet searches beginning in 13th.)
By Peter Loftus
Federal authorities arrested a Bristol-Myers Squibb Co. (BMY)
executive Thursday on charges that he used confidential information
about the drug maker's acquisition targets to make more than
$300,000 in illicit profits from stock-option trading.
The U.S. Attorney's Office in New Jersey charged Robert
Ramnarine, the drug maker's assistant treasurer for capital
markets, with three counts of insider-trading securities fraud. The
Securities and Exchange Commission filed parallel civil charges
against Mr. Ramnarine.
Bristol-Myers issued a statement Thursday saying Mr. Ramnarine
has been placed on administrative leave effective immediately.
"Bristol-Myers Squibb has clear and strict policies prohibiting
trading on material non-public information and is cooperating with
the government's investigation," the company said.
The 45-year-old Mr. Ramnarine, of East Brunswick, N.J., is
accused of purchasing options in three companies that Bristol was
targeting: ZymoGenetics Inc., Pharmasset Inc. and Amylin
Pharmaceuticals Inc. (AMLN). Bristol-Myers purchased ZymoGenetics
for $829 million in 2010 and agreed in June to acquire Amylin for
$5.3 billion. Gilead Sciences Inc. (GILD) bought Pharmasset for $11
billion earlier this year.
The criminal complaint filed against Mr. Ramnarine in U.S.
District Court in New Jersey also accused the defendant of lying
about which drug company he worked for and doing online searches
about insider trading in the options market.
A call to a phone listing for a Robert Ramnarine of East
Brunswick, N.J., wasn't immediately returned, and the SEC said he
had no known defense counsel.
Mr. Ramnarine served as director and executive director of
pensions and savings investments at Bristol-Myers from 2008 until
July 2012, when he was named assistant treasurer of capital
markets, according to the complaint.
The defendant was involved in evaluating potential Bristol-Myers
acquisition targets in those roles, the complaint said, and had a
duty not to use material, nonpublic information for his personal
benefit.
According to the complaint, Bristol-Myers began negotiating with
ZymoGenetics about a deal in May 2010, and announced an agreement
in September 2010. Before the public announcement, Mr. Ramnarine
purchased ZymoGenetics call options, which he sold after the
announcement for a profit of $30,551, according to the
complaint.
Bristol-Myers also explored a potential acquisition of
Pharmasset in October and November of 2011 before withdrawing from
discussions, which cleared the way for Gilead's acquisition,
according to the complaint.
Before the November announcement of the Gilead purchase of
Pharmasset, Mr. Ramnarine purchased Pharmasset call options that
eventually netted him about $225,026 in illicit profits, the
complaint said.
According to the complaint, Bristol-Myers made a preliminary
offer to acquire Amylin for $25 to $27 per share in May, ultimately
agreeing to pay $31 per share in June. Before the public
announcement, Mr. Ramnarine purchased Amylin options that resulted
in profits of $55,784, according to the complaint.
Federal authorities also alleged that Mr. Ramnarine took steps
aimed at trying to conceal his conduct. In early November 2011,
before he purchased Pharmasset options, Mr. Ramnarine conducted
Internet searches on a Yahoo site from his Princeton, N.J., office
related to avoiding detection of insider trading, according to
court documents.
The search terms included: "can option be traced to purchaser"
and "can stock option be traced to purchase inside trading,"
according to the complaint. Prosecutors said Mr. Ramnarine also
viewed a 2005 press release about SEC allegations of insider
trading surrounding Reebok shares.
The complaint said that in 2010, Mr. Ramnarine falsely stated
that he worked for Merck & Co. (MRK) in an application to trade
options in a Scottrade account, which he used to purchase some of
the ZymoGenetics options.
"Ramnarine tried to educate himself about how the SEC
investigates insider trading so he could avoid detection, but
apparently he ignored countless successful SEC enforcement actions
against similarly ill-motivated individuals who paid a heavy price
for their illegal trading," Daniel M. Hawke, chief of the SEC
Enforcement Division's Market Abuse Unit, said in a press
release.
Each of the three counts of criminal securities fraud carries a
maximum potential penalty of 20 years in prison and a fine of $5
million, according to the U.S. Attorney's Office in New Jersey.
The SEC is seeking a court order to freeze Mr. Ramnarine's
brokerage account assets, among other sanctions.
FBI agents arrested Mr. Ramnarine Thursday morning. He is in
custody and scheduled to make an initial court appearance Thursday
in federal court in Newark, N.J.
Write to Peter Loftus at peter.loftus@dowjones.com
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