Dr. Edward Kosinski is a cardiologist in his late 60's living in Weston, Connecticut. Dr. Kosinski practices at St. Vincent’s Medical Center in Connecticut and is also the president of Connecticut Clinical Research, LLC, which performs clinical trials for new drugs. Yesterday, Dr. Kosinski was named as a defendant in a criminal prosecution -- as well as an SEC enforcement action -- charging him with two counts of securities fraud-insider trading for allegedly trading based on the confidential results of a clinical trial he conducted.
In an indictment announced yesterday, the DOJ charged that Kosinski was the Principal Investigator for a clinical trial of a drug being developed by a biotech company called Regado. In the course of the clinical trial, Kosinski allegedly learned on June 29, 2014 that "there had been several allergic reactions during the clinical trial, the acceptance of new subjects was put on hold and the Data and Safety Monitoring Board (“DSMB”) would be reviewing the recent events."
Prosecutors charge that the next day, Kosinski sold his 40,000 shares of Regado stock for between $6.59 and $7.00 per share. On July 3, 2014, after Regado publicly disclosed the DSMB review of the clinical trial and that patient enrollment had been suspended, Regado stock dropped from the previous day's close of $3.95 to $2.81 per share. Through his trading, Kosinski avoided a loss of approximately $160,000.
In addition, the indictment alleges that shortly after learning confidential information on July 29, 2014, that a death had occurred in the clinical trial and that the trial was on hold, Kosinski made additional trades in Regado securities, netting more than $3,000.
Ross Garber, an attorney for Dr. Kosinski, stated that the charges against Dr. Kosinski were "unrelated to his medical practice or his patients" and that Dr. Kosinski was contesting the allegations.
The SEC's parallel complaint, which like the DOJ's case was filed in federal court in Connecticut, was investigated by the Enforcement Division’s Market Abuse Unit.