The SEC today brought charges in an alleged insider trading plot involving two tips of nonpublic information regarding the government's plans to cut Medicare reimbursement rates.
The agency also stated that the decision is expected to affect the stock prices of certain publicly traded medical providers or suppliers.
The regulator alleges that David Blaszczak, a former government employee now political intelligence consultant, received confidential details about future decisions by the Centers for Medicare and Medicaid Services (CMS).
Blaszczak was informed about at least three pending CMS decisions that influenced the amount of money companies get from Medicare to provide services or products related to cancer treatments or kidney dialysis.
He then allegedly told the information to two analysts at a hedge fund advisory firm where he was serving as a consultant. They subsequently used the knowledge to give stock recommendations.
The alleged scheme resulted in more than $3.9 million in illicit profits, the SEC said.
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