NEWARK, N.J. (AP) — Executives at two leading drug companies were among six people arrested Monday and charged with insider trading in what federal prosecutors said was a five-year-long scheme that netted more than $1 million.
Among those charged were 42-year-old John Lazorchak, director of financial reporting at Celgene Corp., a biotech drug maker based in Summit; and Mark Cupo, 51, who held a similar position at Sanofi-Aventis, a France-based pharmaceutical company with U.S. headquarters in Bridgewater.
Along with 42-year-old Mark Foldy, a high school friend of Lazorchak's who was a marketing executive with Stryker Corp., a medical technology company, they passed privileged information on their companies' merger and acquisition plans, financial results and regulatory applications to others who would make stock trades based on the information, according to the criminal complaint released Monday.
Lazorchak, of Long Valley, faces 26 counts of securities fraud and Cupo, of Morris Plains, faces 23. Each count carries a maximum prison sentence of 20 years. Cupo faces one conspiracy count and Lazorchak and Foldy, who also lives in Morris Plains, face two apiece.
"Investors have entrusted their life savings to the integrity of financial markets and the belief of a level playing field," Michael Ward, special agent in charge of the FBI in New Jersey, said in a statement. "Insider trading corrupts the process and tilts the playing field in favor of those privileged few with access to information not available to the public, and at the expense of unsuspecting and unknowing investors."
According to the criminal complaint, Lazorchak tipped Cupo to Celgene's impending purchase of Pharmion in 2007. Cupo then allegedly told two friends, Lawrence Grum of Livingston and Michael Castelli of Morris Plains, who made stock trades based on the information.