The former head of a pharmaceutical company was arrested Tuesday in California on insider trading charges, accused of feeding secrets that enabled friends and family to earn over $700,000 illegally.
Sepehr Sarshar, 53, of Encinitas, California, was charged in Manhattan federal court with securities fraud, wire fraud and fraud in connection with a tender offer. He was released on $1 million bail after an initial appearance in San Diego federal court.
Authorities said he provided inside information in 2015 about a pending $3.2 billion buyout offer from Israel-based Teva Pharmaceutical Industries Limited, a generic drug giant, to his friends and family so they could trade securities in Auspex Pharmaceuticals, a company he founded.
Those close associates included a college friend, his then-girlfriend, another longtime friend, and a close relative, authorities said.
William F. Sweeney Jr., head of New York's FBI office, said it seems obvious that a company's secrets should not be shared and yet "time and time again we see where those privy to a company's inside information pass it on to family and friends."
Acting U.S. Attorney Audrey Strauss said Sarshar's friends and family made nearly three-quarters of a million dollars.
A message was left with Sarshar's defense lawyers.