Fairfield County Cardiologist Sentenced to Prison for Insider Trading
John H. Durham, United States Attorney for the District of Connecticut, announced that EDWARD J. KOSINSKI, MD, 70, of Weston, was sentenced today by U.S. District Judge Vanessa L. Bryant in Hartford to six months of imprisonment, two years of supervised release and a $500,000 fine for insider trading.
On November 28, 2017, a jury found KOSINSKI guilty of two counts of securities fraud-insider trading. According to the evidence presented during the trial, on January 29, 2014, KOSINSKI, a cardiologist, entered into a Clinical Study and Research Agreement with an authorized agent of Regado Biosciences, Inc., formerly a Delaware corporation whose common stock traded on the NASDAQ under the ticker symbol “RGDO.” KOSINSKI, as a principal investigator for Regado’s clinical trial, was required to maintain in strict confidence all confidential information he received from Regado or its agent during the course of the clinical trial. In May 2014, KOSINSKI owned 40,000 shares of Regado common stock.
On June 29, 2014, KOSINSKI and other principal investigators received an email from the clinical trial team stating that there had been several allergic reactions during the clinical trial, the acceptance of new subjects was put on hold and the Data and Safety Monitoring Board (“DSMB”) would be reviewing the recent events. On June 30, 2014, while in possession of this non-public information, KOSINSKI sold his 40,000 shares of Regado common stock for between $6.59 and $7.00 per share. On July 2, 2014, after the close of the market, Regado publicly announced that the DSMB initiated an unplanned review of the clinical trial and patient enrollment had been suspended until the DSMB completed its review. On July 3, 2014, the stock fell $3.95 from the day’s previous closing price, to close at $2.81.
By selling his shares of Regado stock KOSINSKI avoided a loss of approximately $160,000.
On July 29, 2014, KOSINSKI and other principal investigators received an email from the clinical trial team stating that a death occurred in the clinical trial and that the trial was on hold. On July 31, 2014, while in possession of this material, non-public information, KOSINSKI purchased 50 Regado common stock put option contracts with a strike price of $2.50. On August 25, 2014, before the market opened, Regado publicly announced that it permanently halted the clinical trial and the price of Regado common stock fell approximately 60 percent. KOSINSKI then purchased 5,000 shares of Regado common stock for approximately $1.13 per share and exercised his put options, netting more than $3,000.
KOSINSKI, who is released on a $500,000 bond, was ordered to report to prison on January 4, 2019.
This matter was investigated by the Federal Bureau of Investigation was prosecuted by Assistant U.S. Attorneys Heather Cherry and Jonathan Francis.
In a related federal civil matter, KOSINSKY has been charged by the Securities and Exchange Commission. (Securities and Exchange Commission v. Edward J. Kosinski 3:16-cv-01322)