By Aruna Viswanatha
WASHINGTON, Jan 25 (Reuters) - A former Morgan Stanley
financial adviser was arrested on Friday on charges of
illegally tipping a friend to an $11 billion pharmaceutical deal
in exchange for $35,000 and a jet ski dock, federal officials
The adviser, Kevin Dowd, 37, was a registered representative
in the Aventura, Florida, branch office of a brokerage firm
between 2005 and 2012, said the U.S. Attorney's office in New
Jersey, which brought the criminal case.
U.S. prosecutors and market regulators said Dowd leaked
details in 2011 about a pending deal by Gilead Sciences to
acquire New Jersey-based Pharmasset Inc. Dowd was tipped off by
a member of Pharmasset's board, who was the Aventura branch's
biggest customer, prosecutors said.
A lawyer for Dowd was not immediately available for comment.
Dowd was charged with conspiracy to commit securities fraud
and is scheduled to appear in federal court in Florida later on
Friday. The Securities and Exchange Commission regulator filed
Broker records indicate Dowd worked for Citigroup and
Morgan Stanley, which co-own the Smith Barney brokerage firm.
A representative of the unit, now known as Morgan Stanley
Wealth Management, said the unit has cooperated in the inquiry.
"Mr. Dowd was in clear violation of company policy and was
terminated on December 12, 2012 for behavior that the firm does
not tolerate," it said in a statement.
On Nov. 18, 2011, before the Pharmasset deal was publicly
announced, Dowd tipped a childhood friend who bought $196,000 in
Pharmasset stock, and made $163,000 on the tip, officials said.
The friend gave Dowd a wooden dock for his jet skis and a check
for $35,000. He used the money for an in-ground pool at his Boca
Raton home, prosecutors said.
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