The banker allegedly shared details of a series of multibillion-dollar buyouts by companies including AbbVie, GSK and Pfizer.
The U.S. Attorney’s Office for the District of New Jersey has charged six people with running an insider trading scheme that allegedly made $41 million off trades informed by pharma M&A secrets leaked by an investment banker.
The banker, Gyunho Justin Kim, allegedly shared information on nine buyouts between 2020 and 2023. The sequence ran from Gilead Sciences’ $21 billion takeover of Immunomedics to AbbVie’s $10.1 billion buyout of ImmunoGen. In between, Kim allegedly shared material nonpublic information on other deals struck by companies including Amgen, Biogen and GSK. Fierce Biotech reports that Kim worked in Citigroup’s San Francisco office.
Prosecutors claim Pfizer’s $5.4 billion Global Blood Therapeutics acquisition was the most profitable trade. According to the court filing, the investment bank where Kim worked represented a company that tried to buy GBT. Kim allegedly met his friend Saad Shoukat, a co-conspirator and the claimed conduit for information to other people in the scheme, around the time that the company was looking into GBT.
Saad Shoukat and six other people allegedly bought GBT stock in the months before the first media reports of takeover interest. With the reports boosting GBT’s stock, the individuals allegedly sold their stakes and collectively made illegal gains of more than $20 million.
The alleged insider trading activity is one of three overlapping securities fraud schemes presented in the court filing. The other two schemes involve market manipulation. Saad Shoukat and his brother Arham Shoukat are accused of manipulating Olema Pharmaceuticals’ stock price. Another brother, Shahwaiz Shoukat, allegedly worked with Saad and Arham to manipulate Opiant Pharmaceuticals’ share price.
Saad Shoukat allegedly bought Opiant stock after Kim told him a company was seeking to acquire the biotech, which was developing an opioid overdose treatment. The potential buyout stalled. Stuck with his stock purchases, Saad Shoukat allegedly worked with his brothers to set up a fake Opiant website and email addresses and send a fake press release announcing a purported deal involving the company.
With the press release going out on Cision PR Newswire, Opiant’s share price jumped 29% in the wake of the fake news. The newswire and Opiant later told journalists and investors to disregard the fake press release. Meanwhile, Opiant’s stock had jumped 29% and the Shoukats had sold shares during the price spike, according to the lawsuit.
Two of the brothers, Saad and Arham, allegedly manipulated Olema’s share price in 2021. The lawsuit claims the brothers invested in Olema, without any input from Kim, and used hacking techniques such as spoofing and social engineering to access confidential information. The information showed Olema’s breast cancer drug candidate OP-1250 was less effective than they had hoped, according to the lawsuit.
Saad and Arham allegedly falsified OP-1250 data, inflating the molecule’s efficacy, and made it look like an official Olema publication. Olema issued a statement about falsified information circulating on social media on Nov. 29, 2021. The biotech’s stock closed up that day. The Shoukats allegedly sold their shares during the price bump. On Nov. 30, 2021, the release of the real data sparked a drop in Olema’s stock.
