U.S. Attorney's Office
Southern District of New York
(212) 637-2600
October 13, 2015

Defendant Sentenced in Manhattan Federal Court to More Than Three Years in Prison for Insider Trading

PREET BHARARA, the United States Attorney for the Southern District of New York announced that ZACHARY ZWERKO was sentenced today in Manhattan federal court to 37 months in prison for his participation in an insider trading scheme. ZWERKO, who worked for a pharmaceutical company (the “Pharma Company”), passed material, nonpublic information to a co-conspirator (“CC-1”) who then made profitable securities trades based on the information and reaped more than $700,000 in profits. The information concerned potential and actual corporate transactions, including acquisitions. ZWERKO was sentenced by U.S. District Judge Alvin K. Hellerstein.

U.S. Attorney Preet Bharara said: “Zachary Zwerko’s attempts to circumvent the law and share inside information may have made him and his co-conspirator lots of money, but such criminal conduct has now come at the expense of his freedom.”

According to the allegations contained in court documents previously filed in federal court, and statements made during the plea and sentencing proceedings of ZWERKO:

From 2010 to 2014, ZWERKO engaged in an insider trading scheme involving trading around information related to the acquisitions of certain pharmaceutical companies. ZWERKO, who was a senior finance analyst in the financial evaluation and analysis group of the Pharma Company, passed material, non-public information related to potential acquisitions to CC-1. As part of his employment, ZWERKO performed work in connection with numerous potential and actual corporate transactions, including acquisitions. ZWERKO also had access to a computer directory maintained by the Pharma Company that contained material, non-public information related to potential acquisitions by the Pharma Company.

ZWERKO on multiple occasions passed to CC-1 material, non-public information related to future acquisitions by the Pharma Company, including the identities of companies that were in negotiations with the Pharma Company for potential acquisitions (the “Target Companies”). ZWERKO and CC-1 at times communicated with each other via disposable cellphone to disguise their communications. CC-1 then traded in the securities of the Target Companies. The Target Companies were subsequently acquired, in one instance by the Pharma Company, and the prices of the shares of the Target Companies increased after the acquisitions were announced publicly. CC-1 then exited CC-1’s positions in the shares of the Target Companies, thereby profiting from the movement in stock price. From this illegal trading, CC-1 reaped trading profits of at least $737,000. CC-1 gave ZWERKO approximately $57,000 in cash, from CC-1’s illegal proceeds, as part of ZWERKO’s share of the scheme’s profits.

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ZWERKO, 33, of Cambridge, Massachusetts, pled guilty on February, 19, 2015, to one count of conspiracy to commit securities fraud and three counts of securities fraud. In addition to his prison term, ZWERKO was sentenced to three years of supervised release, and was ordered to pay a fine of $50,000, a special assessment of $400, and forfeiture in the amount of $644,314.

Mr. Bharara praised the investigative work of the Federal Bureau of Investigation. He also thanked the U.S. Securities and Exchange Commission.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jessica Masella and Edward Kim are in charge of the prosecution.

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