In yet another case of insider trading involving the pharmaceutical industry, the US Securities and Exchange Commission has settled a civil action against James Lieberman, a former manager of environmental health and safety at Array BioPharma. He allegedly traded stock based on material non-public information about a pending transaction with Novartis, according to a complaint filed by the agency.
Array was seeking a partner to develop a cancer drug and began talks with Novartis in late 2009. Just minutes after receiving an e-mail in March 2010 from the Array cfo that a "significant licensing" deal was imminent, Lieberman placed orders to buy Array stock in his brokerage account and one belonging to his sister, over which he had trading authority, the SEC alleges. In the weeks before the deal was announced, he bought nearly 50,000 Array shares worth $128,686, and after the deal was announced on April 19, 2010, the stock jumped 33 percent, to $3.02 a share.
At that point, Lieberman sold all of the shares in both accounts for a $71,361 profit. In settling the case, Lieberman did not admit or deny the allegations, but he was ordered to disgorge the profits, and also pay pre-judgment interest of $4,906. In addition, he must pay a one-time civil penalty that is also $71,361. So all totalled, Lieberman is coughing up $147,628 (here is the SEC complaint).
This is only the latest instance of insider trading in the pharmaceutical industry. Recently, a Bristol-Myers Squibb executive was charged with insider trading for buying stock options in three drugmakers that were targeted for acquisition, according to a Federal Bureau of Investigation arrest complaint filed in federal court. Robert Ramnarine allegedly made $311,361 in illegal profits even as he was responsible for conducting due diligence into pension and savings plans of three drugmakers that Bristol-Myers was eyeing for acquisition (back story).
Earlier this year, FDA chemist Cheng Yi Liang was sentenced to five years in prison for insider trading. Liang, 58, used confidential information about upcoming announcements of 27 different FDA approval decisions involving 19 publicly traded companies over a five-year period, and generated more than $3.7 million in illegal profits for himself (read this).
And Brent Bankosky, a former senior director at Takeda Pharmaceuticals, also earlier this year agreed to pay more than $136,000 to settle charges that he traded on inside information about various business alliances and acquisitions. He worked at US headquarters in Deerfield, Illinois, garnered more than $63,000 in profits, which amounted to a 169 percent gain, by trading on non-public information about two deals in 2008 (look here).