Robert Ramnarine, a former Bristol-Myers Squibb Co. (BMY) executive, was sentenced to a year and a day in prison for insider trading, U.S. Attorney Paul Fishman said.
Ramnarine, 46, also was fined $10,000 today in federal court in Trenton, New Jersey, where he pleaded guilty on June 10, according to a statement by Fishman. In pleading guilty, he admitted trading on inside information while helping the New York-based drugmaker evaluate whether to buy targeted companies.
“Ramnarine, while in possession of the inside information, purchased and sold securities based on such information and thereby received illegal profits of more than $311,361,” according to the securities fraud charge.
The former drug-firm executive admitted he illegally bought stock options before Bristol-Myers bought Amylin Pharmaceuticals and ZymoGenetics Inc., and participated in a confidential auction to buy Pharmasset Inc. He forfeited $324,777 to the U.S. Securities and Exchange Commission, which includes interest on his profit. The SEC sued him at the time of his arrest in August 2012.
Ramnarine, who lives in East Brunswick, New Jersey, faced from 30 to 37 months in prison under advisory guidelines, according to Rebekah Carmichael, a spokeswoman for Fishman. Prosecutors agreed to a lower sentence because of his health, according to Carmichael. He was sentenced by U.S. District Judge Anne Thompson.
“Mr. Ramnarine is gratified that the court imposed a sentence significantly below that recommended by the sentencing guidelines,” said his attorney, Douglas R. Jensen, in an e-mail. “He has fully disgorged the profits from the trading at issue, and accepts the court’s judgment.”
Ramnarine worked in several positions from 1997 to August 2012, including director of pensions and savings investments, executive director of pensions and savings investments and assistant treasurer for capital markets, according to Fishman.
Through those positions, he learned inside information about potential acquisition targets.
Ramnarine admitted that he made $55,784 in illicit profit on options he bought before Bristol-Myers announced on June 29, 2012, that it would buy Amylin for $7 billion.
Bristol-Myers also engaged in discussions from Oct. 13 to Nov. 17 of 2011 about potentially acquiring Pharmasset, which was developing oral drugs for hepatitis C, or HCV. The 82-employee company had a net loss of $91.2 million for the year ended Sept. 30 and no products on the market.
Pharmasset took offers in a “limited auction process” through its investment banking firm, Morgan Stanley Smith Barney LLC, according to the Federal Bureau of Investigation complaint.
Bristol-Myers withdrew on Nov. 17. On the next day, a Friday, Pharmasset closed at $72.67, with trading volume of 1.03 million shares.
The companies announced the following Monday that Gilead, the world’s largest maker of HIV medicines, would buy Pharmasset for $11 billion, or $137 a share in cash, a premium of 89 percent. Volume rose to 7.1 million shares.
Ramnarine made $225,026 in illicit profit on the deal, buying some of his options on his work-issued BlackBerry, according to the arrest complaint.
The SEC was so suspicious of the circumstances surrounding Gilead’s announcement that it opened an insider-trading investigation that day, agency officials said at the time of his arrest.
Bristol-Myers also agreed in 2010 to pay $885 million for ZymoGenetics, according to the FBI complaint. Ramnarine, who bought ZymoGenetics options, performed due diligence on the deal. He made a profit of $30,551 on the transaction, according to the FBI.
From his office in Princeton, New Jersey, Ramnarine conducted Internet searches to determine whether he could be detected by authorities, according to the SEC civil complaint. One search was on the term “can stock option be traced to purchase inside trading,” according to the SEC.
A defendant who gets a year and a day in prison is eligible for early release with good-time credit.
The case is U.S. v. Ramnarine, 13-cr-00387, U.S. District Court, District of New Jersey (Trenton).
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