Jay Clayton, U.S. Attorney for the Southern District of New York | Department of Justice
Gerard Ryan of Oxford, Mississippi, pled guilty on Mar. 26 to securities fraud related to insider trading based on confidential information from a family member employed at a Manhattan-based pharmaceutical company, according to United States Attorney for the Southern District of New York Jay Clayton and FBI Assistant Director James C. Barnacle, Jr.
The case highlights concerns about the misuse of confidential corporate information for personal gain and its impact on market integrity. Prosecutors said Ryan used nonpublic details about drug approval at Kadmon Pharmaceuticals to profit through securities transactions.
"As he admitted today, Gerard Ryan transformed confidential drug approval information into profits for himself and others," said U.S. Attorney Jay Clayton. "Trading on stolen information harms both other market participants and the marketplace itself. SDNY’s Securities and Commodities Fraud Task Force will continue to work with our law enforcement partners to protect American markets and investors."
Court documents state that Kadmon Pharmaceuticals was developing Rezurock, a treatment for chronic graft-versus-host disease, and maintained strict confidentiality around its progress toward Food and Drug Administration (FDA) approval in 2021. Before the public announcement of FDA approval on July 16, 2021, Ryan received material nonpublic information from his family member who worked at Kadmon during that period despite internal warnings that such details were "HIGHLY CONFIDENTIAL." Authorities allege that after receiving this tip—specifically after speaking with his relative just hours after FDA approval but before it became public—Ryan purchased thousands of shares in Kadmon.
Ryan also shared this nonpublic information with an associate who subsequently bought shares before the official news release. Text messages between Ryan and his associate referenced expected price movements following the anticipated announcement.
Ryan pleaded guilty before U.S. District Judge John P. Cronan to one count of securities fraud carrying a maximum sentence of 20 years in prison.
Mr. Clayton praised the investigative efforts by the FBI regarding this matter.
The prosecution is being handled by the Securities and Commodities Fraud Task Force within the U.S. Attorney's Office.
