United States v. Kosinski

Facts

Dr. Edward Kosinski served as principal investigator for Regado Biosciences’ phase three clinical trial of REG1, a cardiac drug designed to prevent blood clotting in angioplasty patients. Kosinski signed a Confidential Disclosure Agreement in June 2013 and a Clinical Study and Research Agreement (CSRA) in January 2014, both requiring him to maintain strict confidentiality of trial information and to promptly disclose if his Regado stock holdings exceeded $50,000, as required by FDA Form 1572. Regado paid Kosinski $80,000 to recruit twenty patients from his practice and oversee their participation. Despite these obligations, Kosinski secretly accumulated approximately $250,000 in Regado shares by May 2014, never disclosing this to Regado. On June 29, 2014, Kosinski received a confidential email about serious allergic reactions causing study suspension. The next morning, before public announcement, he sold all shares, avoiding a $160,000 loss when the stock dropped 58% after the July 2, 2014 public disclosure. On July 29, 2014, he learned via email that a patient had died from an allergic reaction and the study was on hold. Before this became public, he purchased 50 put options betting against Regado’s stock. When the trial’s permanent termination was announced on August 25, 2014, he profited approximately $3,300. Kosinski later admitted to the FBI that his trades were motivated by “greed and stupidity” and that he “didn’t feel good about making those trades.”