A 70-year-old Fairfield County cardiologist is heading to prison after using his position to buy and sell stock based on insider information he received as a principal investor in a biotech company.
Edward Kosinski of Weston was sentenced to six months in prison followed by two years of supervised release and must pay a $500,000 fine for insider trading. He was found guilty by a jury of two counts of securities fraud-insider trading in November last year, according to John Durham, the United States Attorney for the District of Connecticut.
On Jan. 29, 2014, Kosinski, working as a cardiologist, entered into a Clinical Study and Research Agreement with Regado Biosciences, a now-defunct Delaware company whose common stock was traded on NASDAQ. Durham said that Kosinski, “as a principal investigator for Regado’s clinical trial, was required to maintain in strict confidence all confidential information he received from Regado or its agent during the course of the clinical trial.”
In May that year, Kosinski owned 40,000 shares of Regado common stock.
On June 29, 2014, Kosinski and other principal investors received an email from the clinical trial team stating that there had been several allergic reactions during the trial, and the acceptance of new subjects was put on hold, pending a review by the Data and Safety Monitoring Board.
A day later, while the allergic reactions were still not common knowledge, Kosinski sold his 40,000 shares of Regado stock for between $6.59 and $7 per share. On July 2, 2014, after the close of the market, Regado publicly announced that an unplanned review of the clinical trial was being initiated and patient enrollment was suspended until the review could be completed.
On July 3, 2014, the stock fell $3.95 from the previous day’s closing price, to $2.81. By offloading his shares when he did, Kosinski avoided a loss of approximately $160,000.
When a death occurred as part of the clinical trial, it was suspended. When Regado announced that it was halting the clinical trial, Kosinski purchased 5,000 shares of the company for $1.13 per share, and exercised put options, netting him more than $3,000.
Kosinski remains released on a $500,000 bond. He was ordered by U.S. District Judge Vanessa Bryant to report to prison on Jan. 4 to begin his term.
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