(Corrects paragraph 11 to show Horstmann is defense lawyer and add first name)
By Nate Raymond
BOSTON, June 26 (Reuters) - A former Akebia Therapeutics Inc employee accused of engaging in an insider trading scheme must spend a night in jail after he violated a U.S. judge's order and spoke to a witness at the start of his trial on Tuesday.
U.S. District Judge Indira Talwani in Boston ordered the detention of Schultz Chan, who has had prior issues following court directives, after asking why he could not heed her warnings to not talk to witnesses, as he did by saying hello to one.
"At this point you are interfering with the trial if your lawyer can't turn his back on you," Talwani said.
The development occurred shortly after jurors heard opening statements in the trial of Chan and Songjiang Wang, a former Merrimack Pharmaceuticals Inc employee who prosecutors say participated in the insider trading scheme with Chan.
Assistant U.S. Attorney Kriss Basil said both men shared inside information with each other about their respective companies' clinical drug trials in order to profit in the stock market when their employers announced the studies' results.
"That's cheating, and that's the fraud we intend to prove in this case," Basil said.
He said Wang, Merrimack's director of statistical programming, tipped his friend Chan, 54, three times in 2013 to 2014 about positive results in drug studies before the Cambridge, Massachusetts-based company announced them.
Chan, in turn, bought Merrick stock, as did his wife and his landlord, Basil said. On one tip alone, Chan and his wife made $136,000 trading before Merrimack announced the results of a cancer drug study in May 2014, Basil said.
He said Wang, 54, also provided Chan money, which he used to buy Merrimack stock. In 2015, Chan wrote Wang a check for $84,000, representing his profits, Basil said.
When Chan in 2015 joined Cambridge-based Akebia as its director of biostatistics, he also traded in its own stock after learning about the results of study involving a drug to treat anemia patients who also had chronic kidney disease, Basil said.
Both men deny wrongdoing. Defense lawyer Peter Horstmann said Chan, the "mayor of Nerd City," did not need inside information to know from studying public data that Akebia's drug would be successful, which is why he bought stock before he formally began his job.
"The information is out there in the public for someone like Mr. Chan with his experience to take advantage of it," he said. (Reporting by Nate Raymond in Boston Editing by Marguerita Choy)