Remember the group of old high school buddies, who put Colonia High Class of ’88 on the map when they were criminally and civilly prosecuted for an “insider trading scheme focused on pharmaceutical and medical technology stocks”? They’ve all received punishments that range from fines to prison time and that’s in spite of the fact that:

  • The phrase “I have some vacation pictures for you” was a cover for payments made to tippers
  • Deals were referred to in code as the “Fat Man,” while updates on the statuses of deals were communicated with lines like “fat man has a friend” and “fat man walks alone”
  • One of the men assured everyone that even if the Securities and Exchange Commission did catch on, they wouldn’t have the resources to do anything about it. (To wit: “The SEC’s got to pick their battle because they have a limited number of people and huge numbers of investors to go after.”

And yet!

A former senior editor at TheStreet Inc has agreed to pay $10,225 to resolve claims he participated in an insider trading ring involving a group of high school friends, the U.S. Securities and Exchange Commission said Tuesday. The SEC’s case against Michael Baron, 43, followed a related criminal prosecution of six other men involved in an insider trading scheme focused on pharmaceutical and medical technology stocks. Baron was never criminally charged. But in a civil lawsuit filed in New Jersey on Tuesday, the SEC said Baron provided a relative illegal tips about Celgene Corp’s 2007 acquisition of Pharmion Corp and Stryker Corp’s tender offer for Orthovita Inc in 2011. The unnamed relative traded on the information and made more than $6,500 in ill-gotten gains, the SEC said. The SEC said the tip about the Celgene-Pharmion deal came from John Lazorchak, at the time an employee in Celgene’s financial reporting department and a high school friend of Baron’s. The tip about Stryker’s offer, meanwhile, came from Mark Foldy, an employee in its marketing department who likewise attended high school with Baron, the SEC said.

Lazorchak was sentenced in April to 1-1/3 years in prison after pleading guilty to conspiracy and securities fraud charges. Foldy that same month was sentenced to two years supervised release, with six months of home confinement, after pleading guilty to conspiracy and securities fraud charges. Four other men also pleaded guilty in the criminal case, and the SEC charged an eighth man civilly as well. Among those to plead guilty were Lawrence Grum and Michael Castelli, the two main traders in the case. Grum was sentenced in April to one year and one day in prison, while Castelli, a high school classmate, received nine months.

Former TheStreet editor settles SEC insider trading case [Reuters via Lauren LaCapra]
Earlier: Connection To A Company Called “Yeah Baby” Not Even The Best Part Of “High School Buddies” Insider Trading Scam

9 comments (hidden to protect delicate sensibilities)
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Comments (9)

  1. Posted by Raj inmate 6554 | June 17, 2014 at 5:21 PM

    Cramer is a no nothing shithead… Fatman to little boy. Honey bear dropped a daisy cutter…

  2. Posted by guest | June 17, 2014 at 5:25 PM

    the fuck?

  3. Posted by guest | June 17, 2014 at 5:25 PM

    are you lost?

  4. Posted by guest | June 17, 2014 at 5:25 PM

    slowly step away from the keyboard…

  5. Posted by Guest | June 17, 2014 at 8:49 PM

    Oh well, guess the crack wasn't going to smoke itself.

  6. Posted by guest | June 17, 2014 at 8:53 PM

    Fuck inside trading! They should prosecute these punks for unlawful surveillance.

    -C. Christie

  7. Posted by guest | June 18, 2014 at 9:31 AM

    The fat man is a friend of mine.

    C. Gasparino

  8. Posted by 5-lb Bass | June 18, 2014 at 9:48 AM

    If you're going to prosecute, might as well go for the big fish!

  9. Posted by Guest | June 20, 2014 at 12:57 AM

    Billie? Billie Bass? Love yer act!

    – T. Saprano