Local Police Chief Involved in Multi-Million Dollar Insider Trading Scheme, Says SEC
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Local Police Chief Involved in Multi-Million Dollar Insider Trading Scheme, Says SEC
The SEC claims that Cronin and four others – Joseph Dupont, Stanley Kaplan, Paul Feldman, and Jarett Mendoza – were involved in insider trading in the securities of Portola Pharmaceuticals, Inc. in advance of the May 5, 2020 announcement of a tender offer by Alexion Pharmaceuticals, Inc. to acquire Portola.
The SEC charges that Dupont was a senior employee at Alexion and, beginning on or about January 30, 2020, he worked on the company’s potential acquisition of Portola.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTDupont tipped Cronin – one of his closest friends – material nonpublic information about the Alexion-Portola Deal in breach of a duty of trust and confidence to Alexion, according to the SEC.
“Portola’s stock price increased by over 130% on the day of the Announcement. Cronin, Kaplan, Feldman, and Mendoza collectively profited by more than $2.3 million from their unlawful insider trading. Kaplan’s and Feldman’s successive tippees profited by approximately $1.7 million.
The Scheme
The SEC charges that, “Cronin traded on the information that Dupont had tipped him, purchasing Portola stock and call options – including short-term, out-of-the-money call options – ahead of the announcement. In addition to trading for his own account, Cronin unlawfully provided the material nonpublic information he received from Dupont to his friend Kaplan, who then, in turn, unlawfully further passed the information to his friend and colleague, Feldman."
In addition, the SEC asserts, “Kaplan and Feldman each traded on the information to purchase Portola stock and call options, including short-term, out-of-the-money call options, ahead of the Announcement. Kaplan and Feldman also unlawfully provided the material nonpublic information to several of their relatives and colleagues, who also purchased Portola securities ahead of the Announcement. Cronin further unlawfully tipped material nonpublic information about the Alexion-Portola Deal to his close friend Mendoza, who was also Dupont’s close friend. Mendoza then traded on that information, purchasing Portola stock ahead of the Announcement.”
The SEC says that Cronin, Mendoza and Dupont were close friends, “Cronin and Mendoza also vacationed together several times, including trips one-on-one and in a group of the three of them. Dupont’s family also took family vacations with Cronin’s family and, separately, with Mendoza’s family. Dupont and Cronin owned vacation properties near each other in the Madeira Beach, Florida area.”
One example of the illegal transfer of insider information is exemplified by a text in which “Later that evening, at 7:49 p.m., Cronin texted Kaplan: “Good evening, sir. If you need something to take your mind off of the everyday battle, remember that stock I told you about? Good time to buy.”
“Within the next hour, Cronin opened a new brokerage account, transferred $10,000 into it, and placed an order to purchase 1394 shares of Portola stock. His order was executed the following day,” according to the SEC.
On Thursday night, the Town Administrator Michael Mullen, Jr. and Board of Selectmen Chairman Peter D. Caron reported that the Dighton Board of Selectmen met in an emergency session.
The Board of Selectmen voted unanimously to place Cronin on administrative leave.
The board then voted unanimously to name Administrative Sergeant George Nichols to the position of Acting Chief of Police.
Immediately upon being named Acting Chief of Police, Acting Chief Nichols suspended Reserve Officer Joseph Dupont.
A PR statement claimed that “As this is a personnel matter, no further information is available at this time.”
SEC BIOS
Joseph M. Dupont, age 44, resides in Rehoboth, MA. At all relevant times, Dupont was Vice President of Business Operations and Commercial Effectiveness at Alexion, and resided in North Dighton, MA. Dupont is currently employed at another public reporting company. Dupont is, and was at all relevant times, a reserve officer with the Dighton Police Department.
Shawn P. Cronin, age 43, is a resident of Dighton, MA. At all relevant times, Cronin was a Sergeant in the Dighton Police Department. He became its Chief in August 2022.
Jarett G. Mendoza, age 44, resides in North Dighton, MA. At all relevant times, he was employed as a Regional Sales Director for a public reporting company that sells medical devices.
Stanley Kaplan, age 45, resides in Hopewell Junction, NY. Between January 2020 and approximately August 2020, he was living in Brooklyn, NY. At all relevant times, Kaplan was a medical doctor, worked at a hospital (the “Hospital”) in Poughkeepsie, NY, and had additional part-time positions practicing in the Bronx and in Kingston, NY.
Paul Feldman, age 48, resides in Poughquag, NY. At all relevant times, he was a medical doctor who also worked at the Hospital; he also owned a clinic with locations in the Hudson Valley area of NY.