NEW YORK: A former dealmaker at Lazard Ltd, one of Wall Street’s most prominent investment banks, is accused by US authorities of feeding tips on healthcare deals to a friend’s network of insider traders, who generated US$41mil of illicit profits.
Justin Kim, now facing both criminal and regulatory charges, received a Rolex watch and career advice while leaking 10 potential takeovers over several years through 2023, according to a complaint from the US Securities and Exchange Commission, seeking to ban him from the industry.
Last month, the Department of Justice unveiled fraud and insider trading charges against Kim that carry up to 25 years in prison.
The friend, Muhammad Saad Shoukat, two of his brothers and other defendants allegedly used the information for well-timed bets ahead of takeovers.
Deals included Gilead Sciences Inc’s US$21bil acquisition of Immunomedics Inc in 2020, CVS Health Corp’s US$10.6bil buyout of Oak Street Health Inc and AbbVie Inc’s US$10.1bil purchase of ImmunoGen Inc in 2023 – three of the biggest that Lazard worked on in that sector over the past decade.
Though Lazard isn’t accused of wrongdoing, the scheme is coming to light as chief executive officer Peter Orszag looks to build up the firm’s healthcare franchise amid an upswing in global mergers and acquisitions.
Altogether, illegal tips allegedly preceded deals that totalled more than US$60bil in value, according to Bloomberg calculations.
“Get ready bro,” Kim allegedly texted Shoukat in April 2023, shortly after finding out that Immunogen was in talks with AbbVie. “S-- is about to pop off.”
“Shoukat and his co-conspirators benefitted greatly from their years-long scheme, and cheated the system to reap their rewards,” Stefanie Roddy, the Federal Bureau of Investigation’s special agent in charge in Newark, New Jersey, said in a statement as allegations against them began emerging last month.
Attorneys listed for Kim didn’t respond to messages seeking comment, nor did former New Jersey governor Chris Christie, an attorney for the Shoukats. — Bloomberg
