Federal investigators late last month moved to drop charges against 1 of the quartet of suspects accused of insider trading in connection with Abbott‘s (NYSE:ABT) $2.8 billion buyout of Advanced Medical Optics in 2009.
Defendant Roger Wittenbach was accused alongside former baseball player Doug DeCinces and 2 others of acting on information allegedly obtained from DeCinces, who investigators said learned of the impending buyout from then-CEO James Mazzo.
Prosecutors suddenly requested a dismissal of the case against Wittenbach late last month, and U.S. District Judge Andrew Guilford approved the motion in short order, although no reason was given for the dismissal.
Prosecutors in November 2012 indicted DeCinces, Wittenbach and 2 others on criminal charges of insider trading. DeCinces had already agreed to pony up $2.5 million (but admitted no guilt) to settle similar charges leveled by the SEC.
DeCinces allegedly passed the inside information on to 3 of his friends, prosecutors alleged, to make up for bad investment advice he’d given them previously.
The indictment, filed in the U.S. District Court for Central California, levels 44 counts of securities fraud and wire transfer violations against DeCinces; his friend and business partner David Parker; and 2 other friends, F. Scott Jackson and Roger Wittenbach. All 4 men bought up AMO stock ahead of the buyout and sold it all the day news of the deal broke, reaping a total of about $62 million in illicit profits from the trades, according to the indictment.
"Defendant DeCinces had previously provided defendants Parker, Wittenbach, and Jackson with recommendations for investments that had gone bad. Due to their friendship and to make up for these prior bad investment recommendations, defendant DeCinces provided defendants Parker, Wittenbach, and Jackson with inside information defendant DeCinces had received from [Mazzo]," according to prosecutors.