November 4, 2005
Settlement of ImClone Insider Trading Case
The SEC announced the settlement of an insider trading case against Dr. Zvi Fuks and Sabina Ben-Yehuda , who received material non-public information from ImClone CEO Dr. Sam Waksal about a negative FDA response to the drug application for the company's primary product, the colon cancer drug Erbitux. The SEC alleged that Waksal told Ben-Yehuda the information, and she in turn tipped Fuks at Waksal's direction. While Ben-Yehuda sold $73,000 worth of ImClone stock, avoiding a loss of $9,679, Fuks sold over $5 million worth of shares, avoiding a loss of approximately $1.2 million. Fuks had been a member of ImClone's scientific advisory board. In settling the matter, Fuks agreed to disgorge the amount of the loss avoided plus pay a penalty of approximately $1.2 million, while Ben-Yehuda will disgorge the loss avoided and pay a $50,000 civil penalty. An SEC Litigation Release (here) describes the settlement.
Fuks and Ben-Yehuda were originally charged with criminal insider trading, but those charges were dropped pending a resolution of the SEC civil case. The conduct of Dr. Waksal landed him in a federal prison to serve a seven-year sentence, and the disclosure of the information to Peter Bacanovic triggered the investigation that ultimately ensnared Martha Stewart, who sold her shares at the same time. An AP story (here) discusses the settlement. (ph)
TrackBack URL for this entry:
Listed below are links to weblogs that reference Settlement of ImClone Insider Trading Case: