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Press Release

Biopharmaceutical Company Executive Arrested and Charged with Insider Trading

For Immediate Release
U.S. Attorney's Office, District of Massachusetts

BOSTON – An executive of a California-based biopharmaceutical company was arrested yesterday and charged in U.S. District Court in Boston in connection with trading on insider information and profiting nearly $1 million.

Robert Gadimian, 46, of Burbank, Calif., was indicted on seven counts of securities fraud and insider trading. 

According to the indictment, from November 2011 to October 2014, Gadimian was the Senior Director of Regulatory Affairs at Puma Technology, Inc., a biopharmaceutical company based in California whose principal focus was the development of a breast cancer drug called “neratinib.”  Puma was involved in several ongoing drug trials for neratinib including one that a Massachusetts-based consulting firm was conducting for Puma.

The indictment further alleges that by virtue of his position at Puma, including his attendance at steering committee meetings and project team meetings related to ongoing drug trials, Gadimian learned sensitive, non-public information about the ongoing trials and made significant profits from trading on the inside information.  Gadimian also did so in violation of Puma’s insider trading policy.  Specifically, Gadimian allegedly profited approximately $95,000 in 2013 and approximately $1,060,000 in 2014. 

Specifically, the indictment alleges that in July 2014, Gadimian purchased a series of short-term Puma call options in advance of a July 22, 2014 public announcement that Puma achieved positive results during one of the trials.  The following day, Puma’s stock price jumped approximately 295 percent, and Gadimian then allegedly sold all the call options he purchased and profited $910,000 from his illegal trades.

The charging statute provides for a sentence of no greater than 20 years in prison, three years of supervised release and a fine of $250,000.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.

The Securities and Exchange Commission, which conducted a parallel civil investigation, cooperated with criminal authorities in bringing this case. 

United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Neil J. Gallagher, Jr. of Ortiz’s Economic Crimes Unit.

The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.

Updated September 30, 2016

Securities, Commodities, & Investment Fraud