The 7000-dollar Halloween party favor

On June 19, 2012, a promising San Diego biotech, Ardea Biosciences, working on gout and cancer medicines, was bought for $1.26 billion in cash by London-based pharmaceutical company AstraZeneca.

According to charges filed October 24 by the Securities and Exchange Commission (SEC), David Post of Livingston, New Jersey, was tipped off on the Ardea acquisition and raked in big bucks buying in advance of the deal. All told, he rolled up $700,000 in illicit profits doing insider trading on the Astrea deal and one other.

He was tipped off by a friend, Zachary Zwerko, who worked for a pharmaceutical company and knew of a bidding war going on for Ardea. His own company was one of the bidders.

In the weeks before the AstraZeneca deal, Post bought $227,000 worth of Ardea securities, then dumped them for $105,000 in profits, says the SEC. Post and Zwerko used coded messages to communicate by phone and email. Post paid Zwerko $7000 at a Halloween party and later gave him $50,000 in a shoebox.