Pleading Guilty in Insider Trading Scandal
Romero Cabral da Costa Neto, a 33-year-old Brazilian attorney, has pleaded guilty in a U.S. court, admitting his involvement in insider trading. This admission came after he exploited non-public information concerning a significant $1.7 billion transaction involving a client associated with his former law firm, Gibson, Dunn & Crutcher.
A Guilty Plea in Washington, D.C.
Costa entered his guilty plea in a Washington, D.C. federal court, marking a significant development in the case that unfolded two months before his arrest. Awaiting his sentence, Costa will appear in court on December 20.
Profiting from Insider Information
According to prosecutors, Costa engaged in trading activities based on confidential information about the acquisition of CTI BioPharma by drugmaker Swedish Orphan Biovitrum (SOBIV.ST) in May. At that time, Costa, a Brazilian national, was employed as a visiting attorney at Gibson Dunn’s Washington, D.C. office under a one-year contract.
Gibson Dunn’s Response
Gibson Dunn has not issued an immediate comment in response to this development. The firm had previously stated that it was cooperating with authorities and had severed its relationship with the individual in question in August.
Possible Penalties for Costa
In line with his plea agreement, Costa may face a prison sentence of up to 20 years and a fine reaching up to $5 million.
Legal Representation
Costa is being represented by Blake Goebel and Kenya Davis, both former federal prosecutors who now serve as partners at the U.S. law firm Boies Schiller Flexner. Currently, Goebel and Davis have not provided comments on the case.
Details on the Case
Gibson Dunn had been advising CTI BioPharma with another prominent law firm, Skadden, Arps, Slate, Meagher & Flom, as per securities filings and a company statement. Notably, Costa was not one of the attorneys officially assigned to work on the deal. However, he inappropriately accessed files related to it, and on May 9, the day before the public announcement of the acquisition, he purchased over 10,000 shares of CTI. He subsequently sold these shares the following day, pocketing a profit exceeding $42,000, according to prosecutors.
SEC-Related Charges Still Pending
Costa is also grappling with related charges from the U.S. Securities and Exchange Commission (SEC), although that case remains pending and awaits resolution.
In summary, Costa’s admission of guilt underscores the consequences of insider trading and the legal ramifications of exploiting non-public information for personal financial gain. The case against him continues, both in the criminal court system and in the SEC’s purview.
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