Deerfield Management Execs Deny Insider Trading Charges

May 31 2017 | 11:43pm ET

Deerfield Management executives Rob Olan and Ted Huber have pled not guilty along with two others to accusations they participated in an insider trading scheme that relied on information leaked by an employee of the U.S. Centers for Medicare and Medicaid Services (CMS). 

In addition to Olan and Huber, Washington, D.C. political consultant David Blaszczak and CMS employee Christopher Worrall denied the charges before U.S. District Court judge Denise Cote in Manhattan, according to a Reuters article. 

Federal prosecutors charged the four men last week in tandem with former Deerfield executive Jordan Fogel, who was charged separately and has pled guilty. According to the complaint, Blaszczak, who used to work at CMS, received advance notice from Worrall from 2012 to 2014 about the government agency’s planned cuts to the insurance reimbursement rates for certain medical treatments, including a radiation therapy for cancer and dialysis for kidney ailments, which he then allegedly passed along to Olan, Huber and Fogel at Deerfield.

The information allegedly allowed Deerfield to short a number of healthcare companies that would be affected by the cuts, the indictment continues, including Accuray, Varian Medical Systems, DaVita Healthcare Partners and Fresenius. All in, the scheme netted more than $3.5 million in profits and consulting fees, prosecutors allege. The SEC has filed parallel civil complaints against the four men.

Huber and Olan are on leave from Deerfield, according to a Bloomberg article citing an unidentified person familiar with the matter, and they are no longer listed on Deerfield's website.

Founded in 1994, New York-based Deerfield Management has approximately $7 billion in AUM deployed across equity, debt and structured private investments in healthcare companies. The hedge fund manager has not been charged with any wrongdoing and is cooperating fully with the investigations, according to a spokesperson. 

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