WESTON, Conn. — A 68-year-old cardiologist from Weston was indicted on federal charges of making trades based on confidential developments involved in a clinical drug trial, U.S. Attorney Deirdre Daly announced Thursday.
Dr. Edward J. Kosinski, 68, of Weston, was indicted Wednesday on two counts of securities fraud-insider trading by a federal grand jury in New Haven. He is a cardiologist at St. Vincent's Medical Center in Bridgeport.
The charge carries a maximum of 20 years in prison. He appeared Thursday before U.S. Magistrate Judge Robert A. Richardson in Hartford, entered a plea of not guilty and released on $500,000 bond.
According to the indictment, on Jan. 29, 2014, Kosinski entered into a Clinical Study and Research Agreement with an authorized agent of Regado Biosciences Inc.
Kosinski, as a principal investigator for Regado’s clinical trial, was required to maintain in strict confidence all confidential information received from Regado or its agent during the clinical trial. In May 2014, he owned 40,000 shares of Regado common stock.
The following series of events then occurred, according to the indictment:
- On June 29, 2014, Kosinski and other principal investigators received an email from the clinical trial team stating that there had been several allergic reactions during the clinical trial, acceptance of new subjects was put on hold and the Data and Safety Monitoring Board would be reviewing the events.
- On June 30, 2014, while in possession of this non-public information, Kosinski sold his 40,000 shares of Regado common stock for between $6.59 and $7 per share.
- On July 2, 2014, after the close of the market, Regado publicly announced that the DSMB initiated an unplanned review of the clinical trial and patient enrollment had been suspended until the review was complete.
- On July 3, 2014, the stock fell $3.95 from the days previous closing price, to close at $2.81.
By selling his shares of Regado stock, Kosinski avoided a loss of about $160,000.
The indictment also says that on July 29, 2014, Kosinski and other principal investigators received an email from the clinical trial team stating that a death occurred and that the trial was on hold.
On July 31, 2014, Kosinski purchased 50 Regado common stock put option contracts with a strike price of $2.50. On Aug. 25, 2014, before the market opened, Regado publicly announced that it permanently halted the clinical trial and the price of Regado common stock fell 60 percent. He then purchased 5,000 shares of Regado common stock for approximately $1.13 per share and exercised his put options, netting more than $3,000.
In a parallel action, the Securities and Exchange Commission also announced related civil charges against Kosinski in the case.