A former investment banker and his college friend pleaded guilty to an insider trading scheme in which they shared information about two pending corporate mergers, according to U.S. Attorney Melinda Haag.
Jason Lee, 29, of New York and Victor Chen, 29, of Sunnyvale, Calif., both pleaded guilty Tuesday to one count of conspiring to commit securities fraud and one count of securities fraud.
Lee, who worked as an investment banker in the San Francisco office of Leerink Swann, told Chin, about two pending mergers involving Leerink clients in the two weeks between Aug. 26 and Sept. 5, 2009.
Chen used the information to buy shares of Candela Corp. a medical device company that was merging with Syneron Medical. Candela’s stock price rose 40 percent, allowing Chen to sell shares for a nearly $63,000 gain, according to a statement by Haag.
Again in the first two weeks of June 2010, Lee again told Chen about a merger, this time between Somanetics Corp. and a subsidiary of Covidien. Chen used the information to buy shares and options of Somanetics, making a profit of $548,000 when he sold the shares after the merger, according to the government.
They entered guilty pleas before U.S. District Judge Richard Seeborg, who set sentencing for July 23.
The maximum penalty for securities fraud is 20 years in prison.
Case: U.S. v. Lee, No. CR13-180RS