On January 23, 2023, the US Attorney for the Southern District of New York announced that former police chief Shawn Cronin and Paul Feldman, a doctor, each pleaded guilty to one count of securities fraud for their participation in an insider trading scheme involving former Vice President of Alexion Pharmaceutical, Inc. Joseph Dupont. This comes just weeks after co-defendants Dupont and Slava “Stanley” Kaplan were sentenced to three years of probation and five years in prison, respectively, for their roles in the scheme. Cronin and Feldman pleaded guilty for unlawfully purchasing securities of Portola Pharmaceuticals Inc. in 2020 ahead of Alexion’s planned acquisition of the company. Jarett Mendoza, who was charged along with the others in June 2023, settled with the Securities and Exchange Commission shortly after civil charges were filed and also pleaded guilty to criminal charges against him pursuant to a cooperation agreement.
According to the criminal indictment, Dupont shared material nonpublic information (“MNPI”) regarding the acquisition with Cronin, his childhood friend, before it was announced publicly. Cronin allegedly purchased Portola securities based on the tip and then shared the MNPI with friends Mendoza and Kaplan who also allegedly purchased Portola securities based on the tip. Kaplan purportedly shared the tip with a family member and with Feldman, a friend and colleague, who aggressively bought Portola call options based on the tip. Feldman also allegedly tipped at least five additional individuals who also purchased Portola securities. As a result of the illicit trades, Cronin, Feldman and the others reportedly generated millions of dollars in profits after news of the acquisition was shared with the public.
The SEC’s case against Cronin and Feldman continues.