NEWARK, N.J. On April 14, 2011, James Fan stood on a parking-garage landing at Newark Liberty International Airport, a cheer-you-up letter from his young son in his pants pocket, the prospect of a four-story leap facing him.

Fan, 39, had been charged a day earlier with insider trading based on his knowledge of Seattle Genetics, a health-care company where he was manager of clinical programming. Also charged: his younger brother, Zishen, who was scheduled to take the oath of U.S. citizenship a month later.

The total take, a judge later determined, was about $200,000. James Fan was trying to help his brother, who had found himself deep under water after the California real-estate market collapsed in 2008, prosecutors said later.

The Fan case is such a cautionary tale, said Jenny Durkan, the U.S. attorney in Seattle. Both brothers were promising.

The markets are awash in insider trading, and the health-care industry has been particularly hard-hit. Health-care businesses offer illegal traders more opportunities to profit than the finance and technology sectors that have traditionally been prime victims of insiders who leaked confidential data about earnings or deals.

Health companies can live or die on the results of drug trials, which stretch for years before regulators make decisions that can trigger hundreds of millions of dollars in profits or losses. And the industry has undergone significant consolidation, leading to several multibillion-dollar mergers.

The lineup of accused health-industry insider traders illustrates how widespread the illegal practice has become: chief executive officers, hedge-fund traders, bankers, lawyers, doctors, accountants, a retired Delta Air Lines pilot, a film producer and a member of Major League Baseballs Hall of Fame have been charged or sued by regulators.

Health care is particularly attractive to criminals because so much turns on the government regulatory approval, said Rod Rosenstein, the U.S. attorney for Maryland, whose office helped prosecute the Food and Drug Administration (FDA) case. If you have a pending application for a new drug, the difference between yes and no on approvals can be tens or hundreds of millions of dollars.

The Fans are among at least 75 people sued by the Securities and Exchange Commission (SEC) or charged since 2008 with passing or receiving insider-trading tips involving pharmaceutical, biotechnology or other health care stocks.

One health-care inside trader turned informant told the FBI he was once on a golf course with three doctors whose beepers all went off at the same moment with the same inside tip.

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Lure of riches leads to suicide in Seattle Genetics stock case

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