Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, July 10, 2008

SEC Settles Fraud Charges Against Former Transkaryotic Therapies CEO

The SEC announced that on July 9, 2008, a final judgment by consent was entered by the United States District Court Judge for the District of Massachusetts against Richard F. Selden, the former CEO of Transkaryotic Therapies ("TKT"), a biotechnology company that was headquartered in Cambridge, Massachusetts, and was publicly-traded until it was acquired in July 2005. The final judgment against Selden permanently enjoins him from violating the antifraud and other provisions of the federal securities laws, and orders Selden to pay a $125,000 civil penalty and $1,041,417 in disgorgement and prejudgment interest related to his sales of TKT stock during the period of the alleged fraud.

The SEC alleged that Selden made materially misleading statements between October 2000 and October 2002 concerning results of TKT's clinical trials and its U.S. Food and Drug Administration ("FDA") application for its flagship drug, Replagal. The complaint alleged that Selden knew, but failed to disclose, material negative information, including that Replagal's clinical trial failed to meet its primary objective and FDA had told TKT on several occasions that it was a failed study and had recommended additional clinical trials. The complaint further alleged that Selden benefited by selling 90,000 shares of TKT stock between May 2001 and February 2002, prior to TKT's disclosure of some negative information about Replagal on October 2, 2002, which caused TKT's stock price to fall.

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