2 local stockbrokers plead guilty in insider trading scheme
SAN DIEGO — Two San Diego-based stockbrokers pleaded guilty Tuesday to engaging in an insider trading conspiracy that resulted in hundreds of thousands of dollars in illegal profits.
Chad Wiegand, 42, and Akis Eracleous, 48, worked as licensed brokers for National Planning Corp.
According to their plea agreements, the scheme involved insider trading in shares of Ardea Biosciences Inc., a biotechnology company headquartered in San Diego. Among other things, Ardea was developing drugs for treatment of hyperuricemia and gout, and for treating malignant tumors.
On April 23, 2012, Ardea publicly announced that it had entered into a merger agreement in which it would be acquired by AstraZeneca, a multinational pharmaceutical and biotechnology company headquartered in London.
That day, following the merger announcement, Ardea’s shares closed at $31.62, an increase of 51.7 percent from the prior day’s closing price.
As part of the scheme, Wiegand obtained inside information about Ardea — including information about the AstraZeneca merger in advance of the public announcement from his brother-in-law, a corporate insider, according to the U.S. Attorney’s Office.
The brother-in-law, identified in court documents as co-conspirator #1, held a senior position in information technology at Ardea, in which he oversaw Ardea’s entire computer operations infrastructure and had access to information maintained on the company’s computer system.
After obtaining the inside information, Wiegand traded on it for his brokerage clients, earning fees for himself and profits for his clients, prosecutors said.
Wiegand also gave the inside information to Eracleous, his fellow broker, who in turn traded on that information and provided it to several others, who profited themselves and paid profits back to Eracleous.
Court documents describe the defendants engaging in a long-running insider trading scheme spanning the period from March 2009 to April 2012.
They are scheduled to be sentenced on Sept. 4.