David Hobson Pleads Guilty to Insider Trading Scheme, Providence RI…

David Hobson, 47, of Providence, Rhode Island, pleaded guilty in Manhattan federal court to orchestrating a years-long insider trading scheme that netted more than $350,000 in illegal profits. The investment adviser exploited confidential information from his childhood friend, Michael Maciocio, who worked at a pharmaceutical company and routinely accessed nonpublic details about pending acquisitions and drug development deals.

From May 2008 through April 2014, Maciocio, while employed as a Master Planner in the Active Pharmaceutical Ingredient Supply Chain Group, used his access to internal code names, drug indications, clinical trial phases, and chemical structures to identify upcoming corporate targets. Despite clear confidentiality obligations, he leaked this inside information to Hobson, his long-time broker and confidant, enabling a series of illegal trades ahead of major market-moving announcements.

Hobson didn’t waste time. Using the stolen data, he placed trades in securities including Medivation, Inc., Ardea Biosciences, Inc., and Furiex Pharmaceuticals, Inc. — both for himself and on behalf of Maciocio, as well as other clients under his management at two national brokerage firms, referred to in court documents as Brokerage Firm-1 and Brokerage Firm-2.

At times, Hobson even helped Maciocio reverse-engineer the identity of acquisition targets when only code names were available. This collusion turned confidential corporate strategy into personal windfalls, with Hobson raking in over $350,000 in ill-gotten gains. The scheme remained undetected for nearly six years before federal investigators dismantled it.

Hobson pleaded guilty to one count of conspiracy to commit securities fraud — carrying a maximum five-year prison sentence and a fine of $250,000 or twice the gross gain — and one count of securities fraud, which carries identical penalties. His co-conspirator, Michael Maciocio, previously entered a guilty plea, sealing the fate of both men in one of the longest-running insider trading rings uncovered in recent years.

“Insider trading rigs the markets,” said U.S. Attorney Preet Bharara. “As he admitted today, David Hobson exploited inside information provided by his friend and client Michael Maciocio to reap illegal profits for both of them.” With both defendants now convicted, federal prosecutors vow the case stands as a warning to Wall Street insiders tempted to profit from betrayal.