French Doctor Accused Of Insider Trading In NYC
NEW YORK (AP) — A French doctor hired as an adviser on a clinical trial for a liver disease drug passed along secrets about the results including information about a death to a hedge fund portfolio manager who dodged $30 million in losses as a result, federal authorities in New York City said Tuesday in announcing the doctor’s arrest.
Yves Benhamou, 50, of Neuilly-sur-Seine, France, was arrested in Boston on Monday and charged with securities fraud and conspiracy to commit securities fraud, according to a release from U.S. Attorney Preet Bharara and Janice Fedarcyk, head of the FBI’s New York office. If convicted, he could face up to 25 years in prison.
A lawyer for Benhamou did not immediately return a telephone message for comment.
Benhamou, an expert in hepatitis treatment, worked for Human Genome Science Inc., a biopharmaceutical company on a steering committee that oversaw the clinical trial of Albuferon, a drug being tested as a treatment for liver disease Hepatitis C, authorities said.
They said he simultaneously accepted a stream of payments to consult with hedge funds and other investors who bought and sold securities in the health care sector.
Between November 2007 and January 2008, Benhamou communicated information about serious negative results in the trial, including facts about a fatality and the occurrence of lung disease in another patient to the hedge fund manager, who was identified in court papers only as “CC-1,” court papers said.
The death and lung disease were possible side effects of the dosage the trial participants were receiving during the third phase and late stage development of the Albuferon trial, according to the papers.
The hedge fund manager then directed a trader at the hedge fund to sell the fund’s 6 million shares in Human Genome Science, allowing the fund to avoid losses of about $30 million, prosecutors said. The hedge fund was described in a criminal complaint as a privately owned hedge fund sponsor operating as a subsidiary of a major investment management company. The hedge fund had offices in Greenwich, Conn., Manhattan, and London, England, the court papers said.
Fedarcyk called Benhamou the “quintessential insider.”
She added: “Insider information about the clinical trials of Albuferon was invaluable to the hedge fund, but passing it along wasn’t fair, and it wasn’t legal.”
Court papers show that prosecutors plan to prove their case in part through telephone records, including the text of text messages.
(Copyright 2010 by The Associated Press. All Rights Reserved.)