(Reuters) - A former accountant at a New Jersey drug company was among four people charged with insider trading on Thursday, after he tipped a close friend that the company would soon be acquired by saying he had a “little bird” that would make its stock “pop.”
Evan Kita, 27, of Yardley, Pennsylvania, a former accountant at Celator Pharmaceuticals Inc, pleaded guilty to securities fraud and conspiracy counts, the U.S. Department of Justice said. Two other defendants also entered guilty pleas.
Kita was accused of passing tips in the first half of 2016 about clinical trials for his Ewing Township-based company’s leukemia drug, and about Celator’s plans to be acquired, ultimately by Dublin-based Jazz Pharmaceuticals Plc (JAZZ.O).
Prosecutors said Kita tipped his friends Daniel Perez, 28, and Richard Yu, 27, and that Richard Yu tipped his father, Chiang Yu, 55.
The resulting trading gains totaled a few hundred thousand dollars, with some money kicked back to Kita, authorities said.
Richard and Chiang Yu, both of Pennington, New Jersey, pleaded guilty to conspiracy charges.
Perez, Kita’s next-door neighbor in Yardley, was arrested and also charged with conspiracy, prosecutors said.
The U.S. Securities and Exchange Commission filed related civil charges against the four defendants.
Lawyers for the defendants did not immediately respond to requests for comment.
Court papers said Kita sometimes provided tips through an encrypted smartphone application, including on May 20, 2016, when he told Perez of a deadline for Celator suitors to submit bids.
“Listen,” Kita wrote. “I have a little bird[.] And I am told today is a deadline for submitting bids to buy the company[.] Get your ducks in line on your end, idk [I don’t know] when it’s gonna be announced but it’s gonna pop again.”
Jazz announced its $1.5 billion takeover of Celator on May 31, 2016, at a 73 percent premium. Celator’s stock popped.
Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky