'U snooze u lose': Judgment day for $100M biotech insider trading scheme looms as son of former Ariad director stands trial
A criminal trial that begins today in Manhattan promises to unravel a global insider trading ring that profited off of non-public information about multiple biotechs — beginning with the son of a former board director at Ariad Pharmaceuticals.
Telemaque Lavidas is the first defendant to appear in front of a jury among six charged for the scheme. He was indicted for providing George Nikas, a businessman who owned a Greek restaurant chain in New York, with insider information from his father, Athanase Lavidas. Nikas was allegedly at the center of the whole conspiracy, chumming up with investment bankers and a securities trader to enrich himself.
“The investigation to date has identified over 50 deals where the subject traders have engaged in suspicious trading, as a result of which the participants in the scheme have collectively made over $100 million in profits,” according to a 2017 FBI affidavit obtained by Bloomberg.
The indictment alluded to “tens of millions of dollars in illicit profits” but didn’t specify a number.
The maximum statutory term of imprisonment for all counts against Telemaque Lavidas is 135 years, a letter from the Acting US Attorney filed with the court indicated.
Specifically, the prosecutors pointed to four times between 2013 and 2015 when Athanase Lavidas, the CEO of family-owned Lavipharm named Director-1 in the indictment, disclosed material non-public information about Ariad to his son in a breach of confidentiality. Telemaque Lavidas then turned the intel over to Nikas, allegedly in exchange for multiple payments. Nikas’ alleged unlawful trades included:
- Purchasing 14,000 Ariad shares on June 28, 2013 in anticipation of European approval of Iclusig;
- Selling Ariad shares and building a short position from October 4 through October 8, 2013 just before Ariad revealed that the FDA had concerns about Iclusig clinical trials and put them on partial hold;
- Buying Ariad Shares and options between November and December 2013 ahead of the resumption of Iclusig marketing in the US;
- Stocking up on Ariad contracts for difference (CFDs) between July and August 2015 after learning that Baxalta had sent a non-binding offer to acquire Ariad
By the estimates revealed in the indictment, Nikas made at least $2 million from these four trades. During the same period and beyond, he allegedly reaped many more through transactions on the stocks of InterMune, Idenix, Avanir, Receptos, Omnicare, Syngenta, Solera and Buffalo — all before they were set to be acquired. He did so with the help of London-based bankers Benjamin Taylor and Darina Windsor (of Moelis and Centerview, respectively), ex-Goldman Sachs banker Bryan Cohen, and securities trader Joseph El-Khouri.
To make matters worse, the group “took numerous steps to conceal their unlawful scheme, including the use of multiple unregistered ‘burner’ cellphones to communicate with each other,” the indictment charged. In one instance, Cohen allegedly communicated with other members of the scheme on his burner phone from a restaurant owned and operated by Nikas.
Cohen has pled guilty after previously denying wrongdoing and his trial is scheduled for February 4.
Lavidas has been in jail since he was arrested in October 2019. His trial would likely shed light on a secretive scheme that Nikas was apparently trying to bring more people into.
From the indictment:
On or about July 27, 2013, GEORGIOS NIKAS, a/k/a “George Nikas,” the defendant, emailed an acquaintance and wrote “Was trying to find u 3 weeks ago when I had some seriously juicy info for u but nowhere to be found” and further wrote that the information was “Stock market related. U snooze u lose.”