NEWARK, N.J. (AP) -- A Bristol-Myers Squibb executive took advantage of his high-level position and access to nonpublic information to make $310,000 from illegal insider trades, federal prosecutors and Securities and Exchange officials said Thursday.
Robert Ramnarine was arrested Thursday morning by the FBI and was charged with three counts of using nonpublic information on companies his employer was considering buying to make stock trades.
In each case, federal authorities said, Ramnarine was able to use inside knowledge to take advantage of something that almost always happens when a big company announces plans to acquire a smaller one: The smaller company's stock price shoots up.
Even as he made the trades, Ramnarine fretted about getting caught, authorities said. According to a federal complaint, he did an Internet search for "can options be traced to purchaser" just before making a series of trades in November 2011.
And in an application to make online options trades in 2010, he told a retail brokerage that he was employed by Merck & Co., rather than Bristol-Myers.
Ramnarine appeared in a Newark federal courtroom Thursday afternoon to be advised of the charges and his rights. He declined to comment through a court-appointed attorney.
U.S. Magistrate Judge Madeline Cox Arleo told Ramnarine that he likely would not qualify for a public defender going forward, and would have to hire an attorney. His bail was set at $250,000.
Assistant U.S. Attorney Gurbir Grewal declined to discuss what had tipped prosecutors to the allegedly illegal trades, but said the Securities and Exchange Commission had also filed charges against Ramnarine. The SEC is seeking a court order freezing the assets in his brokerage accounts, as well as unspecified fines and restitution, and a ban against him serving as an officer or director of any public company.
Ramnarine, who lives in East Brunswick, began working at Bristol-Myers in 1997. The pharmaceutical company said in an email that it put him on administrative leave and is cooperating with the investigation. The company, as prosecutors noted in the complaint, warns employees against insider trading.
Authorities say Ramnarine could face up to 20 years in prison and fines of $5 million if he's convicted.
Ramnarine, 45, was first director and later executive director of the arm of the company responsible for pension and savings investments, authorities said in a criminal complaint. In those roles, he was tasked with completing due diligence on companies Bristol-Myers targeted for acquisitions and was given information about the firms' pension plans.
Authorities say he abused that knowledge in three planned corporate transactions as Bristol-Myers went on a corporate buying spree as it tried to generate new products before the blood thinner Plavix got competition from seven much-cheaper generic versions in mid-May.
The complaint alleges Ramnarine bought shares and options for Seattle-based ZymoGenetics Inc. in August and September 2010 just before Bristol-Myers announced plans to buy the company. He sold his interests the day after the public announcement.
The complaint said he followed a similar course in November 2011 when Bristol-Myers attempted to buy Pharmasset, Inc. — which was eventually sold instead to Gilead Sciences Inc. of Foster City, Calif. — and again earlier this year when it and partner AstraZeneca PLC of Britain made an offer for San Diego-based Amylin Pharmaceuticals Inc. The Amylin sale has not been completed.
Bristol-Myers has headquarters in New York but has facilities around New Jersey, including in Princeton where Ramnarine works.
Meanwhile, Bristol-Myers shares were falling sharply Thursday because the company announced Wednesday night that it had halted a mid-stage study of a key experimental drug for hepatitis C. The company said at least one patient had suffered heart failure and so it was investigating the cause and whether it was related to the drug, as well as checking on the other patients in the study.
AP Business Writer Linda A. Johnson in Trenton, N.J., and AP writers Geoff Mulvihill in Haddonfield, N.J., and Marcy Gordon in Washington, D.C., contributed to this story.
- federal prosecutors