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Brothers Plead Guilty to Insider Trading of Sequenom Stock

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – A former Sequenom patent agent and his brother have pleaded guilty to insider trading, the US Attorney for the Southern District of California said.

According to a statement from US Attorney Laura Duffy, Aaron Scalia, a former patent agent at the San Diego-based molecular diagnostics firm, and his brother Stephen Scalia, have pleaded guilty to conspiring to trade stock options in Sequenom using insider information.

Aaron Scalia, Duffy said, had regular contact with scientists working on Sequenom's confidential and proprietary intellectual property and shared that information with his brother. Stephen Scalia then passed it on to two others who profited more than $600,000 from trading Sequenom stock based on that information.

Citing court documents, Duffy said that Aaron Scalia passed on the insider information to his brother from October 2008 through 2009.

The individuals who traded stocks based on information from Stephen Scalia — Brent Cohen and his uncle David Myers — pleaded guilty to the same charges last year.

According to his plea, Aaron Scalia admits to passing along tips to his brother first in October and November 2008, when Sequenom senior executives were considering acquiring Exact Sciences.

"As a member of the team performing secret due diligence on Exact Sciences and its intellectual property, Aaron Scalia obtained confidential non-public information about Exact Sciences and Sequenom's efforts to acquire the company," Duffy said in her statement. "During a series of phone calls Aaron Scalia tipped off his brother to Sequenom's efforts to acquire Exact Sciences. Stephen Scalia, in turn, passed on this stock tip to Cohen."

In December, the US Securities and Exchange Commission filed a lawsuit against Cohen and Myers alleging they profited from the insider trading. The SEC yesterday amended its complaint to include the Scalia brothers, according to court documents.