UPDATED Sept. 25, 2014, with statement from Mazzo.
A federal grand jury today indicted former Advanced Medical Optics CEO James Mazzo on insider trading charges stemming from Abbott‘s (NYSE:ABT) $2.8 billion acquisition of AMO in 2009.
Mazzo, who denied the charges today via his lawyer, allegedly tipped off close friend and neighbor Doug DeCinces about the deal. DeCinces, a former baseball player for the Baltimore Orioles, allegedly passed the information on to former teammate Eddie Murray, who agreed to settle his case for $358,000 but admitted no wrongdoing. Today’s indictment levels 13 counts of insider trading violations against Mazzo, who is now chairman & CEO of AcuFocus and an operating partner at Versant Ventures.
In August 2012 the SEC slapped Mazzo and Murray with insider trading charges. The SEC also accused DeCinces of telling at least 4 others about the AMO/Abbott deal. DeCinces agreed to pony up $2.5 million in 2011 to settle SEC charges that he began purchasing AMO shares based on information from someone inside the company and tipped 3 others who also traded on the confidential information. DeCinces did not admit to any wrongdoing in the settlement.
"Mr. Mazzo flatly and unequivocally denies the government’s allegations. Mr. Mazzo has a spotless reputation for professionalism, integrity, and service to his community, built up over a career of 30 years. The notion that he would put all that at risk to give a single friend inside information is absurd. Any claim that he engaged in unlawful conduct is totally baseless," Mazzo‘s attorney, Richard Marmaro of of Skadden Arps Slate Meagher & Flom, told MassDevice.com via email. "The government has not alleged that Mr. Mazzo traded on inside information or profited from any trades by others. Nor has the government alleged any possible reason why Mr. Mazzo would have done so. Instead, the government claims that, for no apparent reason, he decided to give one friend nonpublic information about a corporate deal. The truth is that Mr. Mazzo never disclosed material, non-public information to Mr. DeCinces or any other investor – not to give a trading advantage to a friend, not for any reason."
The probe was spurred by the conviction of Galleon Management hedge fund founder Raj Rajaratnam (who was convicted last year of 14 counts of conspiracy and securities fraud and is serving an 11-year prison sentence). Investigators have turned up leaks about the Advanced Medical Optics deal from a number of sources, according to the news service, including people who worked for AMO, its law firm, Skadden Arps, and its merger adviser, Goldman Sachs Group. Other suspected leakers include Goldman Sachs managing partner Matthew Korenberg and Paul Yook, a former portfolio manager at Galleon.
