Summary: A patent prosecution and intellectual property partner for Arent Fox was convicted in the insider trading of a pharmaceutical merger seven years ago.
Arent Fox patent prosecution and intellectual property litigation partner Robert Schulman was convicted of insider trading in New York. Schulman passed on a tip in 2010 about a billion-dollar pharmaceutical merger. A nearly two-week long trial in Brooklyn resulted in the federal jury presenting a guilty verdict for securities fraud and conspiracy charges.
Schulman was part of a four-lawyer IP litigation team from Hunton & Williams before being fired by Arent Fox in 2015. While with Hunton & Williams in 2013, Schulman’s name was included in an inside trading lawsuit filed by the U.S. Securities and Exchange Commission. The lawsuit was regarding the $3.6 billion acquisition of King Pharmaceuticals Inc. by Pfizer Inc. Pfizer was advised by Cadwalader, Wickersham & Taft while King was advised by Covington & Burling.
The lawsuit was primarily against investment adviser Tibor Klein and Ameriprise Financial Inc. broker Michael Shechtman. The suit claimed that Schulman “drank several glasses of wine and became intoxicated” at a dinner with Klein in 2010. Klein helped manage Schulman’s money was considered his friend. Schulman apparently let it slip about the pending acquisition. He was currently representing King Pharmaceuticals in an IP case that was dismissed.
Schulman was not charged by the SEC. Shectman pleaded guilty to criminal insider trading in 2014. Federal prosecutors decided to go after Klein and Schulman since Klein’s purchase of securities related in $400,000 in illicit profits. Prosecutors alleged that Schulman deliberately told Klein about the acquisition deal.
Schulman adamantly denies “any knowledge of the $15,000 trade made by my broker in my retirement account.” He repeated during the trial that he did not intentionally inform Klein of the deal in an attempt to make money, even breaking down in tears when U.S. District Judge Joan Azrack declined to dismiss the case. Shechtman was called during the trial to serve as a cooperating witness. He told the jury that Schulman tried to cover up his slip-up.
Schulman could be sentenced to up to 20 years in prison. Klein will go to trial in September after the criminal case against him is resolved.
Do you think Schulman accidentally spilled the beans or intentionally did so? Tell us your thoughts in the comments below.
To learn more about others caught with insider trading problems, read these articles:
- Former Managing Clerk of Simpson Thacher, Bartlett Charged in Insider Trading Case
- Former Simpson Thacher Employee Guilty of Insider Trading
- Supreme Court to Rule on Pivotal Insider Trading Case