Hobson Jailed for Pharma Insider Trading Scheme

MANHATTAN, NY – Former investment advisor DAVID HOBSON, 48, of Providence, Rhode Island, is headed to federal prison after being sentenced to six months for a brazen insider trading scheme that exploited confidential information from the pharmaceutical industry. The sentence was handed down in Manhattan Federal Court by U.S. District Judge Laura T. Swain.

Acting United States Attorney JOON H. KIM didn’t mince words, stating, “David Hobson used his relationship with a childhood friend to obtain inside information, and then traded on that information, making hundreds of thousands of dollars in illegal profits. The securities market must be free and fair for all, and our Office’s commitment to investigating and prosecuting insider trading remains firm.” The case highlights the relentless pursuit of financial criminals preying on the system.

The scheme, which ran from May 2008 through April 2014, revolved around HOBSON’s relationship with his long-time friend and client, MICHAEL MACIOCIO, 47. Maciocio, an employee of a major pharmaceutical company (referred to as the “Pharma Company”), was a master planner in the Active Pharmaceutical Ingredient Supply Chain Group. He had access to non-public details regarding potential acquisitions, including code names, drug indications, dosages, and clinical trial phases. HOBSON, in some instances, actively assisted Maciocio in deciphering the identities of the target companies.

Maciocio, violating his fiduciary duties, tipped HOBSON to these impending deals. HOBSON then illegally traded on this information, not only for his own profit but also on behalf of his investment advisory clients. The pair profited handsomely, with HOBSON pocketing approximately $165,000, Maciocio receiving $40,000, and HOBSON’s clients benefiting by nearly $150,000. Specific stocks involved included Medivation, Inc., Ardea Biosciences, Inc., and Furiex Pharmaceuticals, Inc. The total forfeited amount is $385,664.39.

In addition to the prison sentence, HOBSON will serve two years of supervised release. Maciocio previously pled guilty to one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of securities fraud on May 20, 2016, and is awaiting sentencing. The investigation was spearheaded by the Federal Bureau of Investigation, with assistance from the U.S. Securities and Exchange Commission.

The case was prosecuted by Assistant U.S. Attorneys Aimee Hector and Rebecca Mermelstein of the Office’s Securities and Commodities Fraud Task Force, demonstrating a continued federal focus on cracking down on illicit financial activity and ensuring market integrity. The Grimy Times will continue to follow this case and report on any further developments.