BOSTON (Reuters) - The operator of a Massachusetts-based medical marijuana consultation practice was arrested on Thursday on charges that he engaged in insider trading based on information he learned from his wife, a former employee of Ariad Pharmaceuticals Inc.
Harold Altvater, 55, was arrested and charged in an indictment file in Boston federal court with three counts of securities fraud based on a series of trades he placed in Ariad’s stock in 2013 and 2014.
Japan’s Takeda Pharmaceutical Co Ltd (4502.T) earlier this year acquired the Cambridge, Massachusetts-based cancer drug maker in a deal valued at $5.20 billion.
The indictment was unsealed after Altvater was civilly charged last month by the U.S. Securities and Exchange Commission along with two former Ariad employees for insider trading.
Those ex-employees included his wife, Maureen Curran, who agreed to pay $20,248 to resolve the SEC’s claims without admitting or denying the insider trading allegations.
Altvater pleaded not guilty at a court hearing on Thursday and was released on a $10,000 bond. Geoffrey Nathan, his lawyer, said Altvater “will be adjudicated not guilty after trial.”
According to court papers, Altvater, a former anesthesiologist living in North Reading, Massachusetts, has since 2013 operated Delta 9 Medical Consulting, a medical marijuana consultation practice.
The indictment said that from 2006 to 2014, his wife worked at Ariad, ultimately as senior director of pharmacovigilance and risk management, involved in regulatory compliance issues.
From 2013 to 2014, Altvater obtained information from his wife about the performance of Ariad’s leukemia drug Iclusig in clinical trials and the company’s negotiations with the U.S. Food and Drug Administration about its commercialization, the indictment said.
He then traded in Ariad’s shares in his personal brokerage accounts before various developments with the drug were publicly announced, allowing him to earn profits and avoid losses totaling $116,000, the indictment said.
In court on Thursday, Assistant U.S. Attorney Stephen Frank said Altvater and his wife were now “separated and on the way to divorce” and that Altvater’s wife was a potential witness in the case.
“He’s effectively homeless and residing out of his office,” Frank said.
With no one available to sign a bond for his release, U.S. Magistrate Judge Jennifer Boal added stringent extra conditions, including that he wear an ankle bracelet used to electronically monitor his location and abide by a curfew.
The case is U.S. v. Altvater, U.S. District Court, District of Massachusetts, No. 17-cr-10216.
Reporting by Nate Raymond in Boston; editing by Bernard Orr and David Gregorio