U.S. Attorney's Office
Southern District of New York
(212) 637-2600
February 19, 2015

Mergers and Acquisitions Analyst Pleads Guilty in Manhattan Federal Court to Insider Trading

Preet Bharara, the United States Attorney for the Southern District of New York, announced that ZACHARY ZWERKO pled guilty today in Manhattan federal court to one count of conspiracy to commit securities fraud and three counts of securities fraud in connection with an insider trading scheme in which 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 over $700,000 in profits. The information concerned potential and actual corporate transactions, including acquisitions. ZWERKO pled guilty today before U.S. District Judge Alvin K. Hellerstein.

Manhattan U.S. Attorney Preet Bharara said: “Zachary Zwerko exchanged and traded in nonpublic information about a pharmaceutical company’s activities that generated over $700,000 in profits for a co-conspirator and $57,000 for him. With his guilty plea today, Zwerko’s attempts at hiding his illicit conduct by using a disposable phone for his communications have proven futile, and he will now be punished for his crimes.”

According to the Information filed in Manhattan federal court and statements made at public court proceedings:

From at least 2010 through August 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, nonpublic 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 which contained material, nonpublic information related to potential acquisitions by the company.

On multiple occasions, ZWERKO passed to CC-1 material, nonpublic information related to future acquisitions by the Pharma Company, including the identities of companies which 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 liquidated 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 approximately $737,000. CC-1 gave ZWERKO approximately $57,000 in cash, of CC-1’s illegal proceeds, as part of ZWERKO’s share of the scheme’s profits.

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ZWERKO, 32, of Cambridge, Massachusetts, pled guilty to one count of conspiracy to commit securities fraud and three counts of securities fraud. The conspiracy count carries a maximum sentence of five years in prison. The three counts of securities fraud each carry a maximum of 20 years in prison. ZWERKO also faces a maximum fine of $5,000,000, or twice the gross gain or loss from the offense on the conspiracy count. He agreed as part of his plea agreement to forfeit the proceeds he obtained as a result of the offenses. The maximum potential sentences are prescribed by Congress, and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ZWERKO is scheduled to be sentenced by Judge Hellerstein on May 15, 2015, at 11:00 a.m.

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

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 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 is 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 the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, 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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