Brazilian lawyer pleads guilty to insider trading while at Gibson Dunn law firm

Signage is seen outside of the legal offices of the Gibson Dunn & Crutcher law firm in Washington, D.C., U.S., May 10, 2021. REUTERS/Andrew Kelly Acquire Licensing Rights

Nov 1 (Reuters) – A Brazilian lawyer pleaded guilty in U.S. court on Wednesday to insider trading after profiting off information about a $1.7 billion deal involving a client of his former law firm, Gibson, Dunn & Crutcher.

Romero Cabral da Costa Neto, 33, entered his guilty plea in Washington, D.C., federal court, two months after his arrest. He is scheduled to be sentenced on Dec. 20.

Prosecutors said Costa traded on information about drugmaker Swedish Orphan Biovitrum’s (SOBIV.ST) acquisition of CTI BioPharma in May. At the time, Costa, a Brazilian national, was working as a visiting attorney in Gibson Dunn’s Washington, D.C., office under a one-year contract with the firm.

A spokesperson for Gibson Dunn did not immediately respond to a request for comment. The firm in August said it was cooperating with authorities and had “terminated our relationship with the individual.”

Costa faces a potential sentence of up to 20 years in prison and a fine of up to $5 million, according to his plea agreement.

Costa is represented by Blake Goebel and Kenya Davis, both former federal prosecutors who are now partners at U.S. law firm Boies Schiller Flexner. Goebel and Davis did not immediately respond to requests for comment.

Gibson Dunn advised CTI BioPharma on the deal along with another large law firm, Skadden, Arps, Slate, Meagher & Flom, according to securities filings and a statement from the company.

Costa was not one of the lawyers assigned to work on the deal and improperly viewed files related to it, prosecutors said. He purchased more than 10,000 shares of CTI on May 9, the day before the public announcement of the acquisition, and sold them the next day, making a profit of more than $42,000, prosecutors said.

He is facing related charges from the U.S. Securities and Exchange Commission. That case is still pending.

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Reporting by David Thomas

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David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at [email protected] and on Twitter @DaveThomas5150.