As part of his plea agreement, Jay Fung will have to forfeit his profits and interest.
TRENTON -- A Florida man who authorities said made more than $250,000 on an insider stock tip from a brokerage adviser pleaded guilty Wednesday to securities fraud.
Jay Fung, 42, of Delray Beach, admitted guilt before U.S. District Judge Anne E. Thompson in Trenton.
Court records show that Kevin Dowd, a financial adviser from Boca Raton, Fla., and lifelong friend of Fung, tipped him off to the planned $11 billion acquisition of Pharmasset Inc., by Gilead Sciences in November of 2011.
Before the announcement, share of the Princeton-based manufacturer of antiviral drugs for HIV, hepatitis B and hepatitis C were trading at $72.67 on the NASDAQ stock market, court records say.
With Dowd's inside information, Fung purchased call options and shares of Pharmasset stock on Nov. 18, 2011, court records say.
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Three days later, Gilead announced that it would buy Pharmasset for $137 a share in cash, an 89 percent premium over its Nov. 18 price, court records say.
Fung sold his options and shares later that day, pocketing more than $250,000 in illegal profits, court records say.
Fung paid Dowd $35,000 for the inside information, records show.
Dowd pleaded guilty in 2014 and was sentenced to three years' probation and forfeiture.
Fung faces a maximum penalty of five years in prison and a $250,000 fine, according to his plea deal, as well as forfeiture of $345,245.
He is scheduled to be sentenced June 20.
The U.S. Securities and Exchange Commission filed a related civil complaint Wednesday against Fung. It said Fung agreed to settle the complaint by paying back more than $700,000 in illegal profits and $60,000 in interest earned from his sale of the Pharmasset stock.
Tim Darragh may be reached at tdarragh@njadvancemedia.com. Follow him on Twitter @timdarragh. Find NJ.com on Facebook.