Four found guilty in insider trading case linked to U.S. health agency

Four found guilty in insider trading case linked to U.S. health agency
Four found guilty in insider trading case linked to U.S. health agency

By Brendan Pierson

NEW YORK (Reuters) - Two partners at the hedge fund Deerfield Management and two others were found guilty on Thursday of charges they engaged in an insider trading scheme based on leaks from within a federal healthcare agency.

Rob Olan and Ted Huber, partners at Deerfield Management who are currently on leave, were convicted of counts including wire fraud and conversion of government property. David Blaszczak, founder of political consulting firm Precipio Health Strategies, and Christopher Worrall, who worked for the U.S. Centers for Medicare and Medicaid Services (CMS), were also convicted of related charges. The verdict was handed down by a jury in Manhattan federal court.

The four men were charged with fraud, conspiracy and misappropriating government property in May 2017.

Prosecutors said in an indictment that Worrall tipped Blaszczak about upcoming decisions from CMS, which decides how much government insurance programs will reimburse healthcare companies. They said Blaszczak passed the information on to Huber and Olan, who used it to make profitable trades.

Blaszczak himself had worked at CMS, and kept in touch with Worrall after he left, according to prosecutors. Worrall's illegal tips to Blaszczak included advance notice about rules cutting reimbursement rates for radiation cancer treatment and dialysis, allowing Deerfield to profit by trading in companies affected by the rules, prosecutors said.

The companies involved included radiation oncology companies Accuray Inc and Varian Medical Systems, and dialysis companies DaVita Healthcare Partners Inc, NxStage Medical Inc and Fresenius Medical Care, a unit of Fresenius Medical Care AG of Germany, according to the indictment.

Prosecutors said the scheme ran from about 2009 to 2014.

In a related civil case, the U.S. Securities and Exchange Commission said the scheme yielded $3.9 million in profits and at least $193,000 in consulting fees for companies where Blaszczak worked.

(Reporting by Brendan Pierson in New York; Editing by Tom Brown)

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