Think it pays to alert your brother-in-law about the new cancer drug your company is licensing and the upcoming acquisition of your company by a big market leader?
It paid off in almost $750,000 for three men… until the SEC recently charged all three with insider trading.
Such is the case of Michael Fefferman who, as senior director of IT at Ardea Biosciences, tipped off his brother-in-law, Chad Wiegand, of upcoming announcements relating to two pharmaceutical trials, a licensing agreement for a cancer drug, and the eventual acquisition of Ardea by AstraZeneca.
Ardea, a stockbroker, purchased Ardea stock in various customer accounts based on the confidential information he had received from Fefferman. He also clued in his friend and fellow broker, Akis Eracleous, so he could buy the stock for himself and his customers.
This insider trading resulted in illegal profits of $530,000. One of Eracleous’s clients was also named in the SEC complaint for the purpose of recovering insider trading profits in his brokerage account. This person paid back the entire amount and interest totaling $219,175.
Fefferman, Wiegand, and Eracleous have all agreed to settlements with the SEC. They will include repayment of the money, plus interest, plus penalties. Wiegand and Eracleous will also be barred from the securities industry.
But, in case they thought they were out of the woods, the U.S. Attorney’s Office for the Southern District of California announced it would pursue criminal charges against Weigand and Eracleous.
The SEC doesn’t mess around. Let RegTec help your company and its employees know where the lines are and how to stay on the good side of SEC compliance and its regulations.