Ex-Lazard Banker’s Insider Tips Reaped $41 Million Haul, US Says

Core Viewpoint - A former dealmaker at Lazard Ltd. is accused of insider trading, allegedly providing tips on health-care deals that resulted in $41 million in illicit profits for a network of traders [1][2]. Group 1: Allegations and Charges - Justin Kim faces criminal and regulatory charges for leaking information on 10 potential takeovers from 2020 to 2023, which included receiving a Rolex watch and career advice in exchange for the tips [2]. - The Department of Justice has filed fraud and insider trading charges against Kim, which could lead to a prison sentence of up to 25 years [2]. - The insider trading scheme involved well-timed bets on major deals, including Gilead Sciences' $21 billion acquisition of Immunomedics, CVS Health's $10.6 billion buyout of Oak Street Health, and AbbVie's $10.1 billion purchase of ImmunoGen [3]. Group 2: Impact on Lazard - Although Lazard is not accused of wrongdoing, the allegations surface as CEO Peter Orszag aims to strengthen the firm's health-care franchise amid a rise in global mergers and acquisitions [4]. - The insider trading scheme allegedly involved tips related to deals totaling over $60 billion in value [4]. - Lazard has stated that it has a zero-tolerance policy for such conduct and is cooperating with authorities regarding the allegations against Kim, who has not been employed by the firm since 2023 [5]. Group 3: Details of the Insider Trading Scheme - Kim had access to significant deals while at Lazard, which advised on at least 17 health-care transactions worth over $1 billion during the period of the alleged insider trading [8]. - The group targeted nearly half of these transactions, including Biogen's $7.3 billion acquisition of Reata Pharmaceuticals and Nestle's $2.6 billion takeover of Aimmune Therapeutics [8]. - Kim allegedly communicated with his friend Shoukat through encrypted messaging apps and had access to sensitive information via virtual data rooms and internal communications [9]. Group 4: Additional Allegations Against Shoukat's Group - Shoukat and his associates engaged in various schemes, including impersonating physicians to obtain confidential information about clinical trials and manipulating stock prices through false information [13][14]. - They also pressured executives at Opiant Pharmaceuticals for clinical data and published fake press releases to inflate stock prices [15].