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CORRECTED-Biotech employee arrested, accused by U.S. of insider trading
February 7, 2017 / 5:57 PM / 7 months ago

CORRECTED-Biotech employee arrested, accused by U.S. of insider trading

(Corrects 9th paragraph to say that Schultz Chan was accused of tipping Songjiang Wang before the September 2015 announcement)

By Nate Raymond

Feb 7 (Reuters) - A Merrimack Pharmaceuticals Inc employee was arrested on Tuesday on charges that he engaged in an insider trading scheme with a former employee of a rival biopharmaceutical company.

Songjiang Wang, who Cambridge, Massachusetts-based Merrimack has employed as director of statistical programming since 2011, was charged in a criminal complaint filed in federal court in Boston with conspiring to commit securities fraud.

The 52-year-old’s arrest came after federal prosecutors brought related charges in June against Schultz Chan, who had been the director of biostatistics at another Cambridge-based company, Akebia Therapeutics Inc.

Wang, of Westford, Massachusetts, is scheduled to appear in court later on Tuesday. A hearing for Chan, who has pleaded not guilty, is also scheduled for then.

Lawyers for Wang and Chan did not immediately respond to requests for comment.

Merrimack was not identified by name in the complaint, which referred to it only as “Pharm Co. 1.” But a separate court filing said Merrimack was Wang’s most recent employer, and details in the complaint matched that of the company.

Representatives for Merrimack did not respond to requests for comment.

According to the complaint, Wang provided Chan inside information in 2013 and 2014, ahead of announcements by Merrimack about positive results in three different drug studies. This allowed Chan to place trades based on those tips.

Chan, in turn, tipped Wang in advance of positive clinical study results for a new drug being developed by Akebia, which allowed him to place trades ahead of the company’s announcement in September 2015, the complaint said.

Based on that tip, Wang made $105,000 in illegal trading profits, according to an earlier lawsuit against Chan by the U.S. Securities and Exchange Commission.

That lawsuit referred to Wang, without using his name, as friend of Chan’s who had previously loaned him $80,000.

The case is U.S. v. Wang, U.S. District Court, District of Massachusetts, No. 17-mj-1005. (Reporting by Nate Raymond in New York; Editing by Lisa Von Ahn and Dan Grebler)

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