After Stryker Corporation acquired Orthovita, Inc. in 2011, the feds charged former Stryker marketing executive Mark Foldy with insider trading.
Stryker/Orthovita Inside Traders Plead Guilty
1 min read Premium comments
Secondary
On October 7, 2013, Foldy, along with Mark Cupo, John Lazorchak and Michael Pendolino plead guilty to the charges. On November 13, 2013, two brokers, Lawrence Grum and Michael Castelli each admitted to two counts of conspiracy to commit securities fraud. Grum also plead guilty to four counts of securities fraud and Castelli admitted to five counts of securities fraud, according to the office of New Jersey District Attorney Paul Fishman.
According to a November 14, 2013 MassDevice story, Grum and Castelli allegedly acted on tips from Foldy about the impending $316 million deal for Orthovita. The brokers were high school friends of Foldy. The scheme generated $1.7 million in illegal profits and kickbacks.
Securities and Exchange Commission (SEC) investigators reportedly said the friends conducted the trades under an “elaborate smokescreen, ” by compiling detailed binders of information on the companies in order to conceal their insider trading as research-motivated decisions.
“This is yet another case where wrongdoers believed they could outsmart investigators by creating an elaborate smokescreen to hide their insider trading, ” Chief of the SEC Enforcement Division’s Market Abuse Unit and Director of the Philadelphia Regional Office Daniel Hawke said in prepared remarks. “Such tactics as using middlemen to pass inside information and compiling research to falsely justify illegal trades will not prevent lawbreakers from getting caught.”
Grum and Castelli each face a maximum of 5 years in prison and a fine of $250, 000 on the conspiracy counts and a maximum of 20 years in prison and a fine of $5 million on the securities fraud counts. They’re expected to be sentenced February 20, 2014.
Foldy, Lazorchak, Cupo and Pendolino are slated to be sentenced January 20, 2014.
React:
Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
Join the conversation
Orthopedic professionals are discussing this. Sign in and upgrade to read every comment and add your voice.