United States District Court, D. Connecticut
MEMORANDUM OF DECISION DENYING DEFENDANT'S MOTION
TO DISMISS THE INDICTMENT
VANESSA L. BRYANT, U.S.D.J.
the Court is Defendant's Motion to Dismiss the Indictment
for failure to state an offense under Federal Rule of
Criminal Procedure 12(b)(3). For the reasons that follow, the
Defendant's Motion is DENIED.
August 3, 2016, a federal grand jury sitting in New Haven,
Connecticut returned an indictment against Defendant Edward
Kosinski charging him with two counts of Insider Trading in
violation of 17 C.F.R. Section 240.10b-5 and 15 U.S.C.
Sections 78j(b) and 78ff. [Dkt. 1 (Indictment).] The
Indictment alleges as follows.
the relevant time period, Defendant was a resident of Weston,
Connecticut and the president of President of Connecticut
Clinical Research, LLC (“CCR”), located in
Bridgeport, Connecticut. Indictment at ¶ 1. Regado
Biosciences, Inc. (“Regado”) is a publicly traded
biopharmaceutical company incorporated in Delaware and
principally located in New Jersey. Id. at ¶ 2.
From approximately September 2013 through June 2014, Regado
enrolled patients in a clinical trial to study the efficacy
of a clinical drug candidate (the “Trial”).
Id. at ¶ 3. Regado hired the Cleveland Clinical
Coordinating Center for Clinical Research (“C5
Research”) to coordinate and manage the Trial.
about June 12, 2013, Defendant, on behalf of CCR, entered
into a Confidential Disclosure Agreement (the
“Disclosure Agreement”) with Regado. The
Disclosure Agreement granted CCR the right to receive
confidential, proprietary information to “evaluate
CCR's interest in participating in the Trial, ” and
required CCR to “treat the information received
confidentially and not disclose such information”
without Regado's prior written consent. Id. at
about January 29, 2014, Defendant entered into a Clinical
Study and Research Agreement (the “Research
Agreement”) with C5 Research, an authorized agent of
Regado. Id. at ¶ 5. Defendant executed the
Research Agreement both individually, as a principal
investigator, and on behalf of CCR. Id. The Research
Agreement required CCR and Defendant to “maintain in
strict confidence all confidential information . . . provided
by C5 Research or Regado during the course of the
approximately October 2013 and May 2014, Defendant purchased
40, 000 shares of Regado common stock. Id. at ¶
6. On or about June 29, 2014, C5 Research informed Trial
investigators and coordinators, including Defendant, that
several Trial participants had allergic reactions to the
clinical drug candidate. Id. at ¶ 8. As a
result, C5 Research indicated it would accept no new Trial
participants until July 2, 2014 and the Data and Safety
Monitoring Board would assess the Trial. Id. This
information was confidential, non-public and material.
about the following day, June 30, 2014, Defendant sold his
$40, 000 shares of Regado common stock for between $6.59 and
$7.00 per share, for a total of approximately $272, 561.
Id. at ¶ 9. He did so knowingly, willfully,
with intent to defraud, and in violation of a duty of trust
and confidence owed to Regado and C5 Research. Id.
2, 2014, the closing price of Regado common stock was $6.76.
Id. at ¶ 10. After the stock market closed that
day, Regado publicly announced that participant enrollment in
the Trial was paused pending the Data and Safety Monitoring
Board's assessment. Id. at ¶ 10. On July 3,
2014, the closing price of Regado common stock was $2.81.
Id. at ¶ 11. By selling his stock before July
2, 2014, Defendant avoided a loss of approximately $160, 000.
29, 2014, C5 Research informed Defendant and other
investigators and study coordinators that a Trial participant
had died and the Trial was on hold pending the Data and
Safety Monitoring Board's assessment. Id. at
¶ 14. The information was confidential, non-public, and
two days later, on or about July 31, 2014, Defendant
purchased 50 Regado put-option contracts with a strike price
of $2.50 and an expiration date of October 18, 2014.
Id. at ¶ 15. This gave Defendant the right to
sell 5, 000 shares of Regado common stock on or before
October 18, 2014 for $2.50 per share. Id. He did so
knowingly, willfully, with intent to defraud, and in
violation of a duty of trust and confidence owed to Regado
and C5 Research. Id. The closing price of Regado
common stock that day was $2.98. Id. at ¶ 16.
about August 25, 2014, Regado publicly announced that it had
permanently halted the Trial. Id. at ¶ 17. Over
the course of that day, Regado common stock prices fell to
$1.13 per share. Id. Approximately three days later,
on or about August 28, 2014, Defendant purchased 5, 000
shares of Regado common stock for approximately $1.13 per
share. Id. at ¶ 18. Defendant then exercised
his put option, selling his 5, 000 shares for $2.50 per share
and netting a profit of over $3, 000. Id.
self-surrendered and was arraigned on August 4, 2016. [Dkt.
4.] Defendant entered a $500, 000.00 non-surety bond and
agreed to conditional pre-trial release. [Dkts. 5, 6.]
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