Swiss Man Charged In Manhattan Federal Court For Insider Trading Scheme That Generated More Than $4.7 Million In Profits

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the indictment of ROLAND MATHYS for his participation in a scheme to trade on material, nonpublic information (the “Inside Information”) regarding a tender offer by Sanofi, S.A (“Sanofi”) for Bioverativ, Inc. (“Bioverativ”).  After the tender offer was announced, MATHYS’s trading yielded over $4.7 million in illegal profits.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Roland Mathys engaged in insider trading, and profited to the tune of nearly $5 million – until his scheme was exposed.  He allegedly used confidential information about a pending acquisition of a company to purchase call options in that company, knowing that the value of these options would balloon after the acquisition was publicly announced.  Working with the FBI and the SEC, we remain committed to policing the marketplace to take the profit out of cheating.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Every time someone engages in insider trading, they illegally stack investment odds in their favor.  Mathys’s alleged behavior is not only dishonorable, but illegal.  While this type of activity might initially prove profitable, in the long run there’s nothing to be gained.”

According to the allegations contained in the Indictment filed today in Manhattan federal court[1]:

Background of Sanofi’s Tender Offer for Bioverativ

On November 3, 2017, Sanofi, a multinational pharmaceutical company headquartered in Paris, France, delivered to Bioverativ, a multinational biotechnology company headquartered in Waltham, Massachusetts, a non-binding proposal offering to acquire all outstanding shares of Bioverativ at a price of $98.50 per share in cash.  Bioverativ specialized in the development and commercialization of therapies for the treatment of hemophilia, and its stock was traded under the ticker symbol “BIVV” on the NASDAQ Stock Exchange.  On December 5, 2017, Sanofi and Bioverativ entered into a confidentiality agreement regarding the acquisition negotiations.  On December 18, 2017, representatives of Sanofi and Bioverativ met in New York, New York, for a management presentation, which included a review of Bioverativ’s business, products and pipeline, operations, and projections.  On January 4, 2018, Sanofi indicated that it would be willing to pursue an acquisition of Bioverativ at a price of $105 per share, subject to Sanofi’s successful completion of due diligence and Bioverativ’s agreement to engage exclusively with Sanofi.  On January 6, 2018, Sanofi and Bioverativ executed an exclusivity agreement, which provided Sanofi with the right, through January 26, 2018, to negotiate exclusively the potential acquisition of all the outstanding shares of Bioverativ at the price of $105 per share.

The Sanofi Executive Acquires Inside Information About the Acquisition of Bioverativ and Discloses it to his Family Member

By January 7, 2018, Individual-1, in connection with his employment as an executive vice president at Sanofi, learned that an acquisition of Bioverativ by Sanofi was being negotiated, that such an acquisition was likely to happen, and that such an acquisition would take place in the near future, which Inside Information he had a duty to keep confidential.  On or about January 8, 2018, during a telephone conversation, Individual-1 disclosed to his family member, Individual-2, Inside Information regarding Sanofi’s planned acquisition of Bioverativ. Specifically, Individual-1 told Individual-2, in sum and substance, that Sanofi was acquiring a Boston-based biotech company involved in developing a hemophilia drug.

Individual-2 Discloses Inside Information about the Acquisition of Bioverativ to MATHYS

Between January 8, 2018, and January 12, 2018, Individual-2 disclosed to his friend MATHYS Inside Information regarding Sanofi’s planned acquisition and the fact that Individual-2 had learned the Inside Information from Individual-1.  Based on MATHYS’s prior dealings with Individual-1, MATHYS knew that Individual-1 was an executive vice president at Sanofi.

From January 12, 2018, through on January 19, 2018, MATHYS purchased approximately 1,607 Bioverativ call option contracts, all with an expiration date of February 16, 2018, for a total purchase price of approximately $170,071.  MATHYS’s purchases constituted a significant percentage of the trading in Bioverativ call options on each day, as shown in the table below.

The Acquisition is Announced, and Bioverativ’s Share Price Increases by Approximately 62%

On the evening of Sunday, January 21, 2018, Sanofi and Bioverativ entered into a merger agreement (the “Merger Agreement”).  Pursuant to the Merger Agreement, Sanofi would commence a tender offer no later than 15 business days after the date of the Merger Agreement, to acquire all of the outstanding shares of common stock of Bioverativ, at a purchase price of $105.00 per share (the “Tender Offer”), which represented a premium of approximately 64% over Bioverativ’s closing price the prior trading day.

On the morning of Monday, January 22, 2018, prior to the opening of the financial markets in Paris and New York, Sanofi and Bioverativ issued a joint press release announcing the signing of the Merger Agreement (the “Announcement”).

On January 22, 2018, following the Announcement, Bioverativ shares opened trading at $104.21 per share, reached an intra-day high of $104.30 per share, and closed at $103.79 per share, an increase of approximately 62% over the closing price on the prior trading day.  Since Bioverativ shares had begun trading on the NASDAQ in January 2017, they had never closed at or above $64.12.

MATHYS’s Insider Trading Generates an Illicit Profit of Over $4.7 Million

On January 22, 2018, MATHYS sold all the Bioverativ call option contracts that had a strike price of $65 or $70, for a net profit of approximately $2,518,622.70.  On January 23 and 26, 2018, he sold 325 Bioverativ call option contracts with a strike price of $75, for a net profit of approximately $711,000.81.

On January 26, 2018, at the request of his relationship manager at Credit Suisse, Ltd. (the “Relationship Manager”), MATHYS executed a declaration in which he represented that his transactions in Bioverativ call options were based only on publicly available information and/or personal market analysis, and that no Inside Information was used.  MATHYS also stated to the Relationship Manager that MATHYS was extremely surprised by the developments relating to Bioverativ, that he had nothing to do with Bioverativ or Sanofi, and that he did not have any information relating to Bioverativ’s acquisition when he purchased Bioverativ options.  

On February 8, 2018, the Securities and Exchange Commission (the “SEC”) obtained a preliminary injunction freezing the approximately $3,229,623.51 in proceeds that MATHYS had generated from selling a portion of the Bioverativ call options (the “Preliminary Injunction”).  On February 16, 2018, pursuant to a court order, the SEC directed the liquidation of the remaining 550 Bioverativ call option contracts, which resulted in net profits of approximately $1,568,732.47, which were also frozen pursuant to the Preliminary Injunction.

Between February 8, 2018, and February 10, 2018, MATHYS acknowledged to Individual-2, in sum and substance, that MATHYS had traded in Bioverativ based on the Inside Information that MATHYS had obtained from Individual-2.

*                    *                    *

MATHYS, 32, is a citizen and resident of Switzerland.

MATHYS is charged with one count of fraud in connection with a tender offer, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.  The case has been assigned to U.S. District Judge Denise Cote.

Mr. Berman praised the work of the FBI, and thanked the SEC for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Christine I. Magdo is in charge of the prosecution.

The allegations contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.