Seth Markin, a former FBI trainee, has been sentenced to 15 months in prison after he pleaded guilty in December to engaging in an insider trading scheme.
Mr. Markin, 32, was arrested in July 2022 and charged with securities fraud in the U.S. District Court for the Southern District of New York. Prosecutors alleged Mr. Markin had surreptitiously reviewed a binder of non-public information in possession of his then-girlfriend, who had worked as an associate for a law firm representing pharmaceutical company Merck and traded on that non-public information.
Merck had been in the process of acquiring a smaller firm called Pandion Therapeutics. Prosecutors say Mr. Markin had reviewed privileged documents about the acquisition around February 2021 and then tipped off his friend, Brandon Wong.
Mr. Markin had been a trainee of the FBI at the time of this scheme, working to become an agent for the bureau.
The securities fraud charge Mr. Markin pleaded guilty to carries a maximum sentence of 20 years in prison. On Wednesday, March 13, U.S. District Judge Edgardo Ramos handed down a 15-month prison sentence.
“Seth Markin betrayed the trust of his then-girlfriend when he misappropriated confidential information, traded based on that information, and tipped several friends and family members. Markin knew his actions were wrong and lied, repeatedly, to try to cover up his scheme,” U.S. Attorney Damian Williams said Wednesday. “Markin, who had been accepted into the FBI as a new agent trainee at the time of his conduct, finds himself in a complete reversal of fortune—instead of investigating crimes, he’ll now spend time in prison.”
The non-public information Mr. Markin acquired from his then-girlfriend reportedly indicated Merck would acquire Pandion for approximately three times the smaller company’s share price. Upon learning this information, Mr. Markin began purchasing Pandion stock on the expectation the Merck acquisition would send the value of these Pandion stocks higher, and notified Brandon Wong, 40, of this insider information.
According to the U.S. Securities and Exchange Commission (SEC), Mr. Markin made about $82,000 from this insider trading scheme, while Brandon Wong made about $1.3 million.
Prosecutors say Mr. Markin and Brandon Wong together notified at least 20 people about the Pandion acquisition. Brandon Wong allegedly told at least seven of these people to purchase Pandion stock, including his brother Brian Wong.
To conceal their scheme, prosecutors allege Mr. Markin and Brandon Wong communicated their plans through an encrypted messaging service and deleted several messages to further conceal their conversations. The two also planned to attribute their financial successes to information they gleaned from Stocktwits, a forum where online users can discuss trades.
Following their windfall profits from the Pandion stock trades, those involved in the insider trading scheme shared several gifts. For example, prosecutors say Brandon Wong gave Mr. Markin a Rolex watch valued at $40,000, treated him to a vacation in Hawaii, and treated him to dinner at three-Michelin-starred restaurant in New York that cost more than $1,000.
In addition to his prison sentence, Mr. Markin will have to complete a three-year term of supervised release. He was also ordered to forfeit $82,366, consistent with his profits from the insider trading scheme.
Mr. Markin was not the first to admit guilt in this insider trading scheme.
Brian Wong pleaded guilty in November 2022 to being an accessory after the fact to conspiracy to commit securities fraud and tender offer fraud. He was sentenced in April 2023 to three years of probation with three months of home confinement. He also had to forfeit $403,375.75.
Brandon Wong pled guilty to one count of securities fraud in April 2023.
Another defendant named in the case, Jonathan Becker, also pled guilty to one count of securities fraud in September 2023.
