Thursday April 10 9:05 PM EDT
SEC alleges insider trading in two biotech companies
WASHINGTON, April 10 (Reuter) - The Securities and Exchange Commission said Thursday it filed insider trading charges against 13 individuals
involving the stocks of Alpha 1 Biomedicals Inc. ALBM.OB and Sciclone Pharmaceuticals Inc .
Agency officials called the enforcement action involving the biotech companies' shares a landmark case because it is the first time an SEC insider trading
action has involved the misuse of private information about a drug's clinical trials.
"If you've got confidential information about clinical trials you can't cheat the market by using that information," an SEC attorney said.
In the two separate complaints, the SEC said two groups of individuals were tipped off ahead of time by the lead doctor on the clinical trial, Dr. Milton
Mutchnick, and his aide, Dr. Rangarao Panguluri, regarding the poor performance in clinical trials of an experimental anti-hepatitis drug, Thymosin alpha 1,
developed by Alphas 1 and licensed to SciClone.
The agency said that the individuals Mutchnick and Panguluri tipped avoided a total of $300,000 in losses.
The SEC settled charges with eight of the 13 individuals but did not reach a settlement with the remaining five because it alleged some of those defendents
provided phony alibis and tried to cover up the illegal trades.
In one case filed in U.S. District Court in Washington, the agency alleged that Mutchnick, a member of the faculty of Wayne State University Medical
School, and his wife, tipped a group of friends and family members in Michigan and Ohio about the drug's poor performance.
Without admitting or denying any wrongdoing, Milton and Renee Mutchnick and six others settled the SEC's charges. The Mutchnicks have agreed to pay
a civil penalty of $163,494. Three others agreed to pay more than $100,000 in avoided losses, civil penalties and interest.
"He fully cooperated with the SEC, he did not profit financially in any fashion from the communications that were made, but he is being asked to pay a
penalty for the losses avoided by others," said Mutchnick's attorney.
The agency in a separate complaint filed in U.S. District Court in Los Angeles, accused Panguluri, of Anaheim, Calif., of tipping a separate group of
friends and business associates at a time when he was negotiating with them about joining their medical practice.
Not only did some of those defendents avoid losses but some made a profit from selling short shares, SEC said.
An attorney representing Panguluri denied the SEC's allegations. "There has been no violation of the Securities Exchange Act," he said.
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Gee Organ, if you are right about the clinical trials and you have real sources of "inside information", (or even if you don't and the trials tank) I'll bet you'll roll right over for the FBI when they waltz in with the SEC, (or do they use US Marshalls???). Nothing like a cell, hot lights and manacles to make you cooperative. Of course since you must be so hard to trace at nwu.edu that no one could ever find you, right Mark - YEAH RIGHT. Oh and I'm sure SI or nwu.edu would challenge the feds to maintain your anonimity - Uh huh.... Can you say million dollar fine potential, plus triple what you made on the illegal trades? Now of course the thread lurkers who play on this info are fairly well shielded, but any posters who do should be wary. Funny thing about the SEC, they go after the sources of info alot more diligently than the users of the info. You qualify as both. Notice how nearly everyone settles with the SEC rather than risk the maximum fines. They not only know how to put the screws to you, they've invented a whole new world of screws. Stupid move Mark, you sure put yourself at risk with your big mouth and urge to show off for the world. You had better hope the trials succeed, so your ass doesn't end up in the fire. Oh, and if the trials do go bad and the stock does tank, you can be sure that the people on this thread who've lost their money and have been pissed off with you all along would never stoop so low as to call the SEC. I wonder if they have a reward program in place for information, it sure wouldn't surprise me if they did, the SEC is even more savvy than the IRS and they do have rewards.
From one who never uses or passes "inside info" because it is so dumb,
Dave |
