Bristol-Myers Squibb announced in June a deal to buy Amylin Pharmaceuticals for $7 billion. But before the deal was public, a Bristol-Myers executive used his insider position to make a profit, federal prosecutors say.
The executive, Robert Ramnarine, has been charged with insider trading, according to documents filed in the United States District Court in New Jersey. He faces three counts of securities fraud, accused of trading call options of companies involved in potential deals with his employer.
Mr. Ramnarine, who lives in East Brunswick, N.J., was arrested on Thursday morning, according to a spokesman for Paul J. Fishman, the United States attorney in Newark.
The charges center on personal trades he made in the call options of three companies that Bristol-Myers was acquiring: ZymoGenetics, Pharmasset and Amylin, the criminal complaint said. All together, Mr. Ramnarine made more than $300,000 on the illegal trades, according to the complaint.
The trades, which took place between 2010 and 2012, followed a pattern, according to the complaint. Mr. Ramnarine, an assistant director of capital markets at Bristol-Myers, would buy call options through personal brokerage accounts. After the deals were announced, he would sell those positions, the complaint says.
He apparently had some apprehensions. According to the complaint, Mr. Ramnarine did Internet searches last year for the terms “can stock option be traced to purchase inside trading,†and “insider trading options trace illegal [sic].†The court document also says the viewed an article on the blog Zero Hedge about insider trading in options of Ann Taylor.
The Securities and Exchange Commission also filed a complaint against Mr. Ramnarine.
“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 i ll-motivated individuals who paid a heavy price for their illegal trading,†said Daniel M. Hawke, the chief of the S.E.C. Enforcement Division's market abuse unit.
The agency is seeking a court order to freeze the executive's brokerage account assets.
Mr. Ramnarine's lawyer could not be immediately identified.
The charges come amid a broader crackdown by the federal government on insider trading. Investigators have been focusing on tips passed to hedge fund traders. The United States attorney's office in Manhattan has won a number of convictions, including that of Rajat K.Gupta, the retired head of the consulting firm McKinsey & Company, and Raj Rajaratnam, the former head of the hedge fund Galleon Group.
United States v. Robert Ramnarine
Securities and Exchange Commission v. Robert Ramnarine
