U.S. man admits insider trading on Japan drug cos

Reuters News
Posted: Mar 19, 2012 5:03 PM
U.S. man admits insider trading on Japan drug cos

NEW YORK (Reuters) - A former human resources consultant pleaded guilty on Monday to illegally sharing confidential information with a friend about deals involving Japanese drugmakers.

Scott Allen, 45, of Atlanta, told Manhattan federal court Judge Deborah Batts that he had shared information about acquisitions by two Japanese drugmakers, Takeda Pharmaceutical Co Ltd and Dainippon Sumitomo Pharma Co Ltd, with a friend.

The friend, John Bennett, was also charged and pleaded guilty in November to the scheme, which netted the two more than $2.6 million in illegal profits.

"I shared that information with a personal friend and he traded on that information," Allen told the judge.

Monday's guilty plea is the latest success in a campaign by the Manhattan U.S. Attorney's office against financial crimes at companies, hedge funds and consulting firms.

Prosecutors said Bennett, described in court documents as an independent film producer, bought shares of Millennium Pharmaceuticals ahead of its April 2008 acquisition by Takeda, and in Sepracor Inc ahead of its September 2009 takeover by Dainippon.

He learned of the mergers from Allen, who worked at Mercer, the consulting firm on the deals, and paid him more than $100,000 in cash for the tips, prosecutors said.

Allen pleaded guilty to one count of conspiracy and seven counts of securities fraud. Prosecutors agreed not to seek a sentence longer than four years and nine months.

Bennett pleaded guilty to one conspiracy count and two securities fraud charges.

The case is U.S. v. Allen et al, U.S. District Court for the Southern District of New York, No. 11-0997.

(Reporting By Basil Katz; editing by Matthew Lewis)