Ex-Investment Adviser Allen Pleads Guilty to Insider Trading
Scott Allen, a former Mercer LLC investment adviser, pleaded guilty to charges that he supplied nonpublic information to a friend in a $2.6 million insider- trading scheme involving drug-company acquisitions.
Allen, 45, of Atlanta, admitted in federal court in Manhattan today that he shared illegal tips about the April 2008 acquisition of Millennium Pharmaceuticals Inc. (MLNM) by Takeda Pharmaceutical Co. (4502) and about the 2009 purchase of Sepracor Inc. by Dainippon Sumitomo Pharma Co. (4506)
“I had discussions with a personal friend and shared that information with him and he in turn traded on that information,” Allen told U.S. District Judge Deborah Batts. “The motive behind my decision was primarily friendship but also for financial gain.”
Allen pleaded guilty to seven counts of securities fraud and a charge of conspiracy to commit securities fraud. His trial was set to begin March 27 before Batts. He said today in court that he betrayed his fiduciary duty to his employers by passing the tips to his friend, John Bennett, an independent film producer. Bennett pleaded guilty to insider trading charges in November.
Charles Salmans, a spokesman for Mercer, said his firm “is fully cooperating with the authorities in their investigation matter concerning a former employee. Mercer is not a subject or target of the investigation.”
Wrong and Illegal
Batts today asked Allen if he knew what he was doing was wrong and illegal.
“I did, your honor, and I deeply regret those decisions,” he said.
Batts allowed Allen to remain free on $500,000 bond and scheduled his sentencing for Aug. 20. While each count of securities fraud carries a term of as long as 20 years in prison, the Manhattan U.S. Attorney’s Office agreed as part of Allen’s plea not to seek a term of incarceration longer than 57 months.
Allen and his attorney, Brian McEvoy, declined to comment after court.
Bennett has acted in several films, including the 1990 courtroom drama “Presumed Innocent” and “Last Exit to Brooklyn” according to the website IMDb.com. In 2008, he co- founded Bennett Robbins Productions, which in 2010 produced “Playback,” described on the company’s website as a “supernatural thriller” starring Christian Slater.
During his guilty plea, Bennett said he met his colleague at Manhattan restaurants and paid him an unspecified amount of money for the tips.
Batts has postponed Bennett’s sentencing after originally scheduling it for April. Bennett pleaded guilty in November to one count of conspiracy to commit securities fraud and two counts of securities fraud.
The case is U.S. v. Bennett, 11-cr-927, U.S. District Court, Southern District of New York (Manhattan).
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