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The case, announced by the US Attorney’s Office in the Southern District of New York on Thursday, June 29, is one of four separate insider trading cases that reportedly generated a combined $30 million for those involved.
Named in the case are:
- Shawn Cronin, age 43, of Dighton in Bristol County, Massachusetts and chief of the Dighton Police Department
- Joseph Dupont, age 44, of Rehoboth in Bristol County, Massachusetts
- Slava Kaplan, age 45, of Hopewell Junction in Dutchess County, New York
- Paul Feldman, age 48, of Poughquag in Dutchess County, New York
According to prosecutors, Dupont was a vice president at Alexion Pharmaceuticals and learned about an upcoming acquisition of Portola Pharmaceuticals in January 2020.
Before the merger was made public, in April 2020, he allegedly gave material, non-public information (MNPI) about it to Cronin, his childhood friend.
Cronin, who was a sergeant in the Dighton Police Department at the time and supervised Dupont in his capacity as a reserve officer in the department, then used the information to buy shares of Portola stock, as well as out-of-the-money call options, according to prosecutors.
Cronin went on to share the non-public information with Kaplan, investigators said.
“Cronin shared the MNPI with Kaplan both so that Kaplan could trade in advance of the acquisition and so that Kaplan would assist Cronin in formulating trading strategies to maximize Cronin’s own insider trading profits,” the US Attorney’s Office said in a statement.
“Based on the MNPI that Cronin gave to Kaplan, Kaplan bought Portola shares and options.”
Kaplan then passed the secret information onto Feldman, who “aggressively” bought Portola call options, according to prosecutors.
Alexion’s acquisition of Portola was made public in May 2020 and Portola’s stock value went up significantly.
Together, Cronin, Kaplan, and Feldman are alleged to have made over $2.2 million in illegal profits after selling their shares of Portola stock and call options for Portola stock.
All three men, along with Dupont, were arrested on Thursday.
Cronin, Kaplan, and Feldman are each charged with multiple counts of securities fraud, tender offer fraud, and conspiracy to commit securities fraud and tender fraud.
Dupont is charged with two counts of securities fraud and one count of tender offer fraud.
Cronin’s arrest sparked an emergency session of Dighton Town Administrator Michael Mullen and the Dighton Board of Selectmen, during which the board voted unanimously to place Cronin on administrative leave.
The board then voted unanimously to name Administrative Sergeant George Nichols to the position of acting chief of police.
Dupont was also suspended from the department.
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