Knowing information about changes in government policy is extraordinarily important in the trade industry. In this case, David Blaszczak, a Washington consultant, and four other men were charged for an insider-trading scheme, allegedly using confidential government information to trade with health care companies affected by the government data.
According to federal prosecutors in Manhattan and security regulators, healthcare hedge fund firm Deerfield Management paid Mr. Blaszczak to supply the classified information for Medicaid and Medicare services. This knowledge led to the illegal acquisition of millions of dollars.
Blaszczak received the information from his colleague, Christopher Worrall, who worked in the firm’s Centers for Medicare and Medicaid Services division where he had access to the classified information.
Engagements through email proved that Mr. Blaszczak was boasting about possessing the inside information which contained possible new regulations, changes for kidney dialysis and radiation therapy, and how the publicly traded companies would react to the revisions.
Blaszczak was payed by two analysts from a hedge fund firm, Theodore Huber and Jordan Fogel, to be a consultant. SEC reports Blaszczak firms were compensated with at least $193,000 over the span of 19 months by the hedge fund.
Federal prosecutors believe the scheme produced $3.5 million in illegal profits, however, with the confidential information provided, the SEC claims that the illegal profit was actually $3.9 million.
This case has been investigated for over a year now, and is still one of the most outstanding insider-trading cases to be filed in the U.S attorney’s office since President Trump fired its chief Preet Bharara in March.
SEC is charging Blaszczak, Worrall, Huber, and Fogel with at least three violations. The complaint can result in disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions.