A Massachusetts police chief has resigned after being charged with insider trading. Dighton Police Chief Shawn Cronin is one of five people, including reserve officer Joseph Dupont, accused of crimes related to a scheme that netted them more than $2 million. Dighton Board of Selectmen Chairman Peter D. Caron said, “On behalf of the community, the Board would like to thank Chief Cronin for his dedicated service to the Police Department, the Town, and its residents.”
Mr. Cronin was placed on leave in June when the US Securities and Exchange Commission (SEC) charged him with insider trading; he had only been in post for a year and was replaced by Sergeant George Nichols, who was promoted to acting chief.
Federal prosecutors allege that Dupont, a vice president at Alexion Pharmaceuticals in January, was informed about an upcoming acquisition of Portola Pharmaceuticals. Before the acquisition was made public, Dupont told childhood friend Cronin about it, and he subsequently purchased shares and call options of Portola, along with other associates.
When the purchase was announced, Cronin and his friends sold their shares and call options. The US Attorney for New York said the group reaped “millions of dollars of illegally obtained trading profits.”
Reports from the Southern District of New York US Attorney’s Office state that Mr. Cronin was charged with three counts of securities fraud and three counts of tender offer fraud and faces a prison term of 25 years.
Cronin and Dupont surrendered to authorities in June and initially appeared in the US District Court for the District of Massachusetts before being released on $250,000 bail.
Insider trading is using knowledge not publicly known to gain profits on the stock market. It includes knowledge about sales or acquisition, changes in management, or an upcoming challenge or difficulty. It is illegal because it disadvantages genuine traders. The website StockofTrade says, “Insider trading gives a few individuals an unfair advantage over those who put in an honest day’s work.”