United States v. Kosinski

Edward Kosinski (defendant) was a doctor and the president of Connecticut Clinical Research, LLC (CCR). Between 2013 and 2014, Kosinki, on his own and CCR’s behalf, entered contractual relationships with Regado Biosciences, Inc. (Regado) and Regado’s agent and coordinator, Cleveland Clinical Coordinating Center for Clinical Research (C5 Research). Regado was a publicly traded biopharmaceutical company that sought to study the effects of a clinical drug candidate on human patients through a clinical trial. C5 Research coordinated the trial. In 2013, Kosinski, on behalf of CCR, entered a confidentiality agreement with Regado so that CCR could receive Regado’s confidential information and evaluate whether CCR wished to participate in the trial. In early 2014, Kosinski, on behalf of himself and CCR, entered into a research agreement with C5 Research for Regado. Kosinski was to work on the clinical drug trial. The research agreement required Kosinski and CCR to maintain information obtained in the course of the clinical trial in strict confidence. Thereafter, Kosinski traded in Regado’s common stock based on confidential information he learned through the trial. After learning that a few trial participants had had allergic reactions to the clinical drug candidate and before the news became public, Kosinski sold a large quantity of stock. Later, Kosinski profited through trading after learning that the clinical trial would be affected due to a participant’s death. The United States (plaintiff) indicted Kosinski for two counts of insider trading in violation of Securities and Exchange Commission (SEC) Rule 10b-5 and violating the Securities Exchange Act. Kosinski filed a motion to dismiss the indictment.