Former FBI trainee charged with insider trading scheme ahead of Merck-Pandion buyout
Working from home presents some unique challenges. Just ask a lawyer who represented Merck during its $1.85 billion Pandion takeover.
A former FBI trainee has been charged with insider trading over profits he made from buying Pandion stock based on private information about the Merck acquisition — which he allegedly learned while working from home with a “romantic partner,” who also happened to be an associate at a law firm representing Merck.
As a result of the pandemic, Seth Markin, a 31-year-old Pennsylvania man, frequently stayed over at his partner’s apartment last January and February, around the same time that Merck had completed its due diligence and filed a proposal to take over Pandion. At the end of January, his partner was assigned to work on the proposed deal.
Markin was present in the apartment for work-related calls and — while his partner wasn’t looking — he allegedly looked through a binder containing confidential information about the deal, according to an SEC complaint.
The day after his partner was assigned to the Merck case, Markin allegedly began buying up Pandion stock. The SEC also accused him of tipping off a friend, 38-year-old New York City resident Brandon Wong. By Feb. 23, 2021 — two days before the deal was publicly announced — Markin had purchased 2,270 shares of Pandion stock.
Wong, who communicated with Markin using an encrypted messaging application, bought 35,382 shares of Pandion stock. Both Markin and Wong allegedly tipped off others as well, according to the SEC.
After the deal was publicly announced, and Pandion’s share price soared over 133%, Markin and Wong made roughly $82,000 and $1.3 million, respectively, in what the SEC says are illegal profits.
Merck announced on Feb. 25 that it would shell out $1.85 billion to snap up Pandion and its portfolio of regulatory T cells (Tregs) to treat a range of autoimmune disorders. That included lead IL-2 candidate for ulcerative colitis PT101, which scored a Phase Ia win earlier that year. Pandion rejected two offers for Merck over the last few years before finally accepting the latest one.
After the deal announcement, Wong allegedly bought Markin a Rolex as a thank-you gift, and paid for some of his expenses on a trip to Hawaii.
The case is part of a series of insider charges that the SEC brought against nine individuals in three separate alleged schemes on Monday.
“If everyday investors think that the market is rigged at their expense in favor of insiders who abuse their positions, they are not going to invest their hard earned money in the markets,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement.