Little League friends divided over insider trading charges

A former Oppenheimer & Co. investment adviser was arrested and charged with insider trading after his childhood friend, who gave him the illegal tips, informed on him to authorities.

David Hobson, 47, of Providence, Rhode Island, was charged Friday with participating in a six-year scheme based on tips from his friend Michael Maciocio, a former employee at drug- maker Pfizer Inc. Prosecutors claim Maciocio passed his friend information about potential acquisition targets from information gleaned from his work. 

Court papers unsealed Friday in Manhattan federal court show Maciocio, 46, had been secretly co-operating with federal authorities since January, providing “detailed information concerning the criminal activities” of his friend, Hobson. Maciocio, who pleaded guilty to four criminal counts, implicated his friend in hopes of leniency when he’s sentenced.

Hobson and Maciocio grew up in Rhode Island, playing Little League baseball and attending high school together, according to a complaint against the two men filed by the U.S. Securities and Exchange Commission. Hobson was Maciocio’s broker for almost 20 years, a relationship that began after a conversation at a bachelor party in the mid-’90s, according to the SEC.

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.

According to court papers, Maciocio was a master planner in a New York-based pharmaceutical company’s Active Pharmaceutical Ingredient Supply Chain Group. There, he learned about plans for drug manufacturing to determine the identity of potential targets, the U.S. said. The alleged insider trading ran from May 2008 to 2014.

Hobson allegedly made about $100,000 by trading on tips about several drug companies, including a deal involving the acquisition of Medivation Inc., a company developing a commercial drug for treating Alzheimer’s disease. He allegedly made $40,000 based on inside information about the acquisition of Ardea Biosciences Inc., a company which was developing a drug to treat gout, and another $30,000 trading on Furiex Pharmaceuticals LLC, the indictment says.

“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.”

A spokesman for the Royal Bank of Canada didn’t immediately reply to a request for comment.

Bloomberg News

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