Trading on insider information is a dangerous gamble with severe consequences, as demonstrated by the recent case of Romero Cabral Da Costa Neto, a former attorney at the renowned Biglaw firm, Gibson Dunn. Mr. Da Costa Neto, age 33, hailing from Rio de Janeiro, Brazil, was charged with insider trading earlier this year, accused of leveraging confidential client data from Gibson Dunn’s internal filing system to conduct trades ahead of a significant pharmaceutical merger and acquisition (M&A) deal.
In early November, Da Costa Neto admitted guilt to these charges. His request for consideration of time elapsed and supervised release was overruled, culminating in a two-month prison sentence. A detailed report on the sentencing process can be visited at The American Lawyer.
This sentencing fell significantly short of the eight-month term federal prosecutors had proposed, a proposition which was notably on the lower end of the total offense level. In their memorandum, prosecutors highlighted that Da Costa Neto’s personal characteristics, backed by a robust education, a coveted employment position, and abundant familial wealth, made his deeds particularly egregious. The memo went on to argue that a period of incarceration serves as a prodigious deterrent for the broader public against committing similar offenses.
Reiterating the gravity of his crimes, Costa criminally profited from insider information related to the acquisition of CTI BioPharma Corp (CTIC), a Gibson Dunn client, by the biopharmaceutical firm Swedish Orphan Biovitrum AB. Just a day before the public announcement of this deal, Costa bought more than 10,000 CTIC shares, selling them the day after to make more than $42,000 in profits.
To compound his punishment, Costa was not only sentenced to prison time but was also ordered to forfeit his wrongful profits and pay a fine of $100. In addition, he settled an agreement with the Securities and Exchange Commission (SEC) regarding a pertinent civil enforcement action.