- Oppenheimer adviser arrested in $370,000 drug stock scheme
- His pal from Pfizer informed on him for months to avoid prison
From Little League to bachelor parties to planning ahead for retirement, David Hobson and Michael Maciocio were friends for most of their lives. But Maciocio in January began secretly talking to U.S. authorities to save himself from prison, implicating his friend in what the government said was a six-year insider trading scheme.
Hobson, 47, a former Oppenheimer & Co. investment adviser, was arrested on insider-trading charges Friday. The government claims Maciocio, 46, passed him inside information he picked up in his former job as a planner at drug-maker Pfizer Inc. Hobson used the tips for trades to make $370,000 for himself, his clients and his friend, according to prosecutors.
Court papers unsealed Friday in Manhattan federal court show that Maciocio, 46, had been secretly cooperating with federal authorities since January, providing “detailed information concerning the criminal activities” of his friend. Maciocio, who pleaded guilty to four criminal counts, is trying to win leniency when he’s sentenced.
The charges against Hobson didn’t identify his or Maciocio’s employers. A person familiar with the matter said Hobson worked at Oppenheimer and the Royal Bank of Canada, while Maciocio worked for Pfizer.
Hobson’s lawyer, Robert Mann, declined to comment on the case. Anthony Traini, who represents Maciocio, didn’t immediately respond to a voicemail seeking comment.
Hobson and Maciocio grew up on Rhode Island, playing Little League baseball and attending high school together, according to a U.S. Securities and Exchange Commission complaint. Hobson was Maciocio’s broker for almost 20 years, a relationship that began after a conversation at a bachelor party in the mid-1990s, according to the SEC.
Maciocio was a master planner in Pfizer’s Active Pharmaceutical Ingredient Supply Chain Group. Beginning in 2008, Maciocio started using information he learned from his job to identify Pfizer acquisition targets, according to the government. While he wasn’t told the names of the target companies, Maciocio did learn Pfizer’s code names for them, as well as information about the composition, chemical structure and clinical testing information about the companies’ drugs, prosecutors claimed. Maciocio, sometimes with Hobson’s help, used the information to uncover the identities of the acquisition targets.
During this time, Maciocio and Hobson frequently e-mailed and phoned one another, sometimes speaking several times a day, according to the SEC. Mixed in with discussions of politics and personal matters, Maciocio passed illegal tips to Hobson, the government claimed.
Hobson allegedly used the tips to trade in the stock of Medivation Inc., a company developing a drug for Alzheimer’s disease, Ardea Biosciences Inc., which was working on a drug to treat gout, and Furiex Pharmaceuticals LLC. The government alleged Hobson made $180,000 for himself, $40,000 for Maciocio and $150,000 for his clients.
Hobson is charged with two counts of conspiracy and two counts of securities fraud. The most serious counts carry a top sentence of 20 years in prison. Hobson pleaded not guilty in Providence, Rhode Island, and was released without bond, according to court papers.z
Maciocio pleaded guilty to similar charges last month in a secret proceeding that was disclosed Friday by Manhattan U.S. Attorney Preet Bharara. As part of a deal with prosecutors, Maciocio agreed cooperate with their investigation, including possible testimony against Hobson if he goes to trial.
“Oppenheimer became aware of this issue some time ago and has cooperated
extensively with government authorities in connection with a former employee
who was the subject of the indictment announced today,” a company spokeswoman, Alexandra Gambale, said by e-mail. “Oppenheimer will continue to do so in the future.”
Asked about Maciocio, Pfizer said in a statement: “The charges in this case relate to the conduct of a former employee. Pfizer takes these allegations seriously and is cooperating fully with the authorities. After identifying the potential improper conduct, Pfizer determined the employee’s actions breached the company’s policies on business conduct and terminated his employment.”
A spokesman for the Royal Bank of Canada didn’t immediately respond to a request for comment on the case.
The case is U.S. v. Hobson, 16-cr-00351, U.S. District Court, Southern District of New York (Manhattan).