(Bloomberg) -- A former Federal Bureau of Investigation trainee pleaded guilty to trading on confidential information about Merck & Co.’s acquisition of Pandion Therapeutics from his former girlfriend while the two were living together during the pandemic.
Seth Markin pleaded guilty on Monday to one count of securities fraud in federal court in Manhattan under an agreement with prosecutors, confessing that he gleaned details about the takeover from documents his girlfriend was sent by her law firm in January 2021. His former girlfriend, a lawyer, wasn’t accused of wrongdoing.
Prosecutors allege that Markin made more than $1.4 million trading on the information and passed the tip to more than a dozen others, including Brandon Wong, a close friend who bought hundreds of thousands of dollars worth of Pandion shares based on the tips and told others, including friends and family.
Merck agreed to buy Pandion in February 2021 for $1.85 billion, or about $60 per share, more than double its closing price at the time.
Markin faced as much as 20 years in prison if the case went to trial. He agreed to not contest a sentence of 37 months or less as part of his deal with the government. Wong pleaded guilty in April and is set to learn his punishment on Jan. 26.
With the money they made, Markin and Wong splashed cash out on trips and gifts for each other. Wong bought Markin a Rolex watch valued at approximately $40,000, a trip to Hawaii, and a meal at a three-Michelin-starred restaurant in New York that cost more than $1,000, prosecutors said.
Prosecutors also said Markin lied to investigators about his trading in Pandion, telling them he had learned about the potential acquisition through social media, and also lied to his ex-girlfriend when she asked him why his name had come up in a probe by the Financial Industry Regulatory Authority.
Markin said his girlfriend had received documents from her firm regarding the transaction and asked him for help putting them onto shelves when he noticed one of the binders was open, revealing the Pandion ticker symbol.
He said he then learned through his own research that the company had recently completed a successful trial of a drug to treat lupus. Over the next month, he said, he engaged in “otherwise innocuous” conversation with his girlfriend that led him to believe the merger had been cleared.
“I recognize that my decision to invest in Pandion was based in part on material non-public information,” Markin, 32, told US District Judge Edgardo Ramos.
The case is US v Markin, 22-cr-395, US District Court, Southern District of New York.
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