December 15, 2017 / 8:29 PM / 2 years ago

Pennsylvania man admits to trading on tips about drug company

(Reuters) - A Pennsylvania man pleaded guilty on Friday to charges that he traded on confidential, inside information that a former Celator Pharmaceuticals Inc employee supplied him, including that the company now owned by Jazz Pharmaceuticals Plc (JAZZ.O) was planning to be acquired.

Daniel Perez, who authorities said lived next door to a former Celator accountant in Yardley, Pennsylvania, entered his plea to one count of securities fraud in federal court in Trenton, New Jersey, prosecutors said.

The plea followed Perez’s arrest in August. Prosecutors at that time announced that three other people, including Evan Kita, the former employee at the New Jersey drug company, had pleaded guilty to participating in the insider trading scheme.

A lawyer for Perez, 28, did not respond immediately to a request for comment.

Prosecutors said Kita told Perez and another friend, Richard Yu, in 2016 that clinical trials for his company’s leukemia drug had produced positive results, allowing both men to place trades before Celator announced the news.

Kita, who joined another drug company in April 2016, later learned from two friends about Celator’s plans to be acquired, ultimately by Dublin-based Jazz for $1.5 billion, according to court papers.

Kita tipped Perez off again, telling him in a May 2016 message via an encrypted smartphone application that he had a “little bird” that would make Celator’s stock “pop,” the documents said.

Kita also told Yu about the potential sale, prosecutors said. They said Yu in turn shared the information with his father, Chiang Yu, who also traded on the tip and agreed to share the profits with Kita.

Kita, Richard Yu and Chiang Yu pleaded guilty on Aug. 31 to securities fraud charges. The trio and Perez are scheduled for sentencing on April 18.

Reporting by Nate Raymond in Boston; Editing by Lisa Von Ahn

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