A former biotech analyst who was charged with insider trading last fall will spend four months in prison this fall after pleading guilty to one count of securities fraud.
A former biotech analyst who was charged with insider trading last fall will spend four months in prison this fall after pleading guilty to one count of securities fraud.
Jason Napodano, a former Zacks biotech analyst, was accused of buying and selling stocks based on non-public information he obtained while preparing equity research reports. Last week a judge in Chicago ruled that Napodano will serve his time at a prison in Otisville, N.Y., according to the judicial ruling. Following that short stint in prison, Napodano will serve one year of probation that includes four months of confinement to his house while wearing a monitoring device. The ruling says that Napodano must pay for the electronic monitoring himself. In addition, he was also ordered to 75 hours of community service, according to the judicial ruling. Napodano has been ordered to surrender himself for confinement by 2 p.m. on Aug. 7.
In the charges levied against Napodano last fall, the government said Napodano earned approximately $143,000, between October 2012 and May 2015 as a result from his schemes. As BioSpace reported when Napodano was charged, prosecutors said prior to the public release of equity research reports that contained positive recommendations about the companies he was researching “Napodano purchased stock in those companies. He then allegedly sold the stock for a profit after his reports were publicly released and the stock prices of the companies increased.” In an effort to evade detection, Napodano allegedly limited his profits from each illegal trade by taking small positions and closing the positions shortly after his reports and articles were published. Napodano helmed Zacks Small Cap Research which focused on penny biotech stocks among others.
In addition to the four months in prison, Napodano is also being ordered to pay a fine of $5,000. That is on top of the forfeiture of his insider trading profits totaling $143,865.48 and prejudgment interest of $17,620.87. Napodano also paid an additional penalty of $143,865.48, the U.S. Securities and Exchange Commission said last year.
The judge also said that Napodano must refrain from meeting with Bilal Basrai. The two men worked together at Chicago-based brokerage firm LBMZ Securities. Basrai was also charged at the same time charges were leveled at Napodano. According to the government at the time of the charges, Basrai, a managing director at the Chicago firm, allegedly learned non-public information about a secondary stock offering, an in-licensing agreement and the release date of the information. Basrai then used the information to make profitable trades, the government said. In the fall Basrai agreed to plead guilty to the charges.
