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Wednesday, July 17, 2024 | Back issues
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Inside Traders Were H.S. Buddies, SEC Says

NEWARK (CN) - A ring of buddies from high school made $1.7 million from inside trading and kickbacks, the SEC claims in Federal Court.

The three lead defendants-Celgene Corp.'s director of financial reporting John Lazorchak, Sanofi's accounting director Mark Cupo, and Stryker Corp. marketing employee Mark Foldy-handed out inside tips about their companies, to trade ahead of public announcements on mergers, earnings, and a drug approval, the SEC said.

"They hoped to avoid detection with no direct connection between the insiders and the traders, and the insiders were later compensated for the inside information with cash payments made in installments to avoid any scrutiny of large cash withdrawals," the SEC said in a statement.

Also sued were Cupo's friend Michael Castelli, and Castelli's high school buddy Lawrence Grum, who were "the primary traders in the scheme," the SEC said.

The final two defendants, Michael Pendolino and James Deprado, are high school friends of Lazorchak.

According to the SEC's somewhat ironic statement: "Among the ways that Castelli and Grum tried to hide their illegal conduct was by compiling binders of research to serve as a false basis for their trading. They actively traded in Celgene securities to create a pattern of long-standing positions in the stock. Grum reassured Cupo that discovery of the scheme and consequent legal action was unlikely due to limited government resources to police insider trading activity. Grum said, 'At the end of the day, the SEC's got to pick their battle because they have a limited number of people and a huge number of investors to go after.'"

The SEC seeks disgorgement and penalties.

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