Wednesday, 10 February 2016
Last updated 13 hours ago
Dec 22 2005 | 8:15pm ET
Hedge fund manager Scott Sacane pleaded guilty in federal court this week to manipulating the price of two biotechnology stocks, which caused the market value of the companies to plummet $300 million.
Sacane, who ran Norwalk, Conn.-based Durus Capital Management, admitted that he manipulated the value of Esperion Therapeutics and Aksys Ltd. by purchasing large quantities of their stocks and then not disclosing these purchases in regulatory filings. He also admitted that he aimed to prevent others from selling the stock by making false statements.
According to amended Securities and Exchange Commission filings in July 2003, Durus "inadvertently" bought 33% of Esperion's shares and 80% of Aksys shares. The SEC lawsuit also named J. Douglas Schmidt, chief operating officer at Durus, in the case. Schmidt pleaded guilty in October to falsifying documents he filed with the regulatory agency on behalf of the firm.
Sacane faces up to five years in prison and a $250,000 fine and Schmidt faces up to 20 years in prison and a fine of up to $5 million.
U.S. Attorney Kevin O'Connor said in a statement, "hedge fund managers need to know that in order to protect the public's confidence in our securities markets, the U.S. Attorney's Office and our federal law enforcement partners will actively investigate and prosecute any attempt to profit from violating the securities laws."