Florida man pleads guilty in Gilead insider trading case
By Jonathan Stempel
March 9 (Reuters) - A Florida man admitted to conducting insider trading based on a tip he received from a former Morgan Stanley broker about Gilead Sciences Inc's planned $11.2 billion purchase of Pharmasset Inc in 2011, federal prosecutors said.
Jay Fung, 42, of Delray Beach, pleaded guilty on Wednesday to conspiracy to commit securities fraud before U.S. District Judge Anne Thompson in Trenton, New Jersey.
He also agreed to repay more than $760,000 of illegal profit and interest to settle related U.S. Securities and Exchange Commission civil charges, that regulator said.
The former broker, Kevin Dowd, pleaded guilty in September 2013 to a criminal conspiracy charge, and has also settled with the SEC.
Prosecutors said Dowd tipped his friend Fung about the merger of Gilead and Pharmasset on Nov. 18, 2011, three days before it was announced, after learning about it from a Pharmasset director who was the largest customer at Dowd's branch.
Fung then illegally bought Pharmasset shares and call options, and sold them after the merger of the two makers of antiviral drugs was announced, prosecutors said.
The merger valued Princeton, New Jersey-based Pharmasset at a roughly 89 percent premium over its share price at the time.
Authorities said Fung also gave Dowd kickbacks for the tip.
Fung faces a maximum five years in prison at his June 20 sentencing, but is likely to get less under his plea agreement, which notes his cooperation with authorities.
"It has been a long process, and Mr. Fung is happy to put this behind him," said James Sallah, a lawyer for Fung.
Dowd was sentenced to probation in his criminal case in April 2014, court records show. A lawyer for Dowd declined to comment on Wednesday.
Gilead is based in Foster City, California.
(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)
