January 9, 2024

New York judge sentences co-defendants for insider trading

On January 5, 2024, the US Attorney’s Office for the Southern District of New York announced that Joseph Dupont, the former Vice President of Alexion Pharmaceutical Inc., and Slava (Stanley) Kaplan were sentenced for their participation in an insider trading scheme.  After pleading guilty to securities fraud in September 2023, Dupont was sentenced to three years’ probation and fined $75,000, while Kaplan received five months in prison, three years of supervised release, and was ordered to forfeit more than $470,000 for his role in the scheme.

In July 2023, the USAO charged Dupont, Kaplan, Jarett Mendoza, Shawn Cronin and Paul Feldman for their involvement in the insider trading scheme.  The Securities and Exchange Commission concurrently filed civil charges against the defendants.  According to the criminal indictment, Dupont learned of Alexion’s upcoming acquisition of Portola Pharmaceuticals Inc. in January 2020 and shared material nonpublic information (“MNPI”) regarding the planned acquisition with his childhood friend Cronin, who purchased Portola securities before the acquisition was announced publicly.  Cronin also allegedly shared the MNPI with his friends Mendoza and Kaplan, who also purchased Portola securities based on the tip.  According to federal prosecutors, Kaplan provided Cronin with trading advice in exchange for the tip and shared the MNPI with a family member and with Feldman, his friend and colleague who aggressively purchased a variety of Portola securities before the acquisition was announced.  After Alexion’s acquisition of Portola was announced, Portola’s stock rose significantly, and the traders reportedly generated millions of dollars in unlawful profits.

In November 2023, Dupont and Kaplan also entered into separate settlements with the SEC in which they, among other things, agreed to be permanently enjoined from violating the antitrust provisions in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  Mendoza also reach a settlement with the SEC in July 2023, shortly after the charges were filed, and pleaded guilty to the criminal charges against him pursuant to a cooperation agreement.  The civil and criminal cases against Cronin and Feldman continue.

USAO SDNY Press Release | Docket – Minute Entries | SEC Judgment – Dupont | SEC Judgment – Kaplan| Indictment