Jay Fung, Securities Fraud, Florida 2011

A Florida man has admitted trading on material, nonpublic information concerning Gilead Sciences Inc.’s $11 billion acquisition of New Jersey-based Pharmasset Inc., U.S. Attorney Paul J. Fishman announced.

Jay Fung, 42, of Delray Beach, Florida, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with conspiracy to commit securities fraud.

In November 2011, a conspirator who worked at a global wealth management firm learned that Pharmasset was going to be sold for a significant profit per share. On Nov. 18, 2011, the conspirator passed the inside information to Fung, who then purchased call options and shares of Pharmasset.

On Nov. 21, 2011, Gilead publicly announced that it had entered into an agreement to acquire Pharmasset for approximately $11 billion, or $137 per share in cash. The purchase price represented an approximately 89 percent premium over Pharmasset’s closing price of $72.67 on Nov. 18, 2011.

Following the public announcement of Gilead’s acquisition of Pharmasset, Fung sold the Pharmasset shares and options he had purchased on Nov. 18, 2011, for total illegal profits of more than $250,000.

Fung faces a maximum penalty of five years in prison and a $250,000 fine, or twice the profits from the offense. Per his plea agreement, Fung must also consent to the entry of a forfeiture money judgment in the amount of $345,245. Sentencing is set for June 20, 2016.

The U.S. Securities and Exchange Commission (SEC) filed a civil complaint against Fung today. U.S. Attorney Fishman credited special agents of the FBI, under the direction of Acting Special Agent in Charge Andrew Campi in Newark, with the investigation leading to today’s plea. He also thanked the SEC for the assistance provided by its Market Abuse Unit, under the direction of Joseph Sansone and Robert Cohen, and its Philadelphia Regional Office, under the direction of Sharon Binger.

The government is represented by Assistant U.S. Attorney Andrew Kogan of the U.S. Attorney’s Office Economic Crimes Unit. Today’s plea is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force.

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