Dive Brief:
- The Securities and Exchange Commission has charged former Sangamo executive Wilson Tang, friend Deshan Govender, and trader Steven Fishoff in an alleged insider trading scheme that reaped $1.5 million in illegal profits.
- The three are accused of trading ahead of a public announcement of a 2014 deal between Sangamo and Biogen that led to a near 40% jump in the smaller company's stock price.
- The SEC is seeking "disgorgement of ill-gotten gains, prejudgment interest, penalties, and injunctive relief" from the accused.
Dive Insight:
In late 2013, then Sangamo vice president Wilson Tang allegedly tipped off friend and business associate Deshan Govender about a pending Sangamo-Biogen deal. The information made its way via Govender to the former day trader Steven Fishoff and his "insider-trading ring." Fishoff and his associates made $1.5 million in illegal profits following the deal's announcement and stock price jump, the SEC charges.
The current action is running in parallel to two further insider dealing actions. In 2015, the SEC charged Fishoff, his brother-in-law Steven Costantin, and his friends Ronald Chernin and Paul Petrello; and in 2017, the SEC charged Joseph Spera as part of the same ring. All five pled guilty, and Petrello, Chernin, Costantin, and Spera agreed to partial settlements with the SEC. The insider trading scheme made over $4.4 million in profits overall in at least 14 "offerings," with over $3.2 million to Fishoff, Petrello, Chernin and Costantin alone.
Insider dealing isn't uncommon in biotech, where deals and clinical data can make stock in smaller companies suddenly rocket up or down. Earlier this month Rep. Chris Collins, R-N.Y., was arrested by the Federal Bureau of Investigation on accusations of insider trading in stock of the Australian biotech Innate Immunotherapeutics ahead of a costly trial failure.
Collins faces counts of securities fraud, wire fraud and making false statements to an FBI special agent, and his son and the father of his son's fiancée were also indicted and charged.
Earlier this year, the SEC filed a lawsuit against a number of unnamed traders in Bioverativ securities around the biotech's acquisition by Sanofi, and a year ago a former accountant at Celator Pharmaceuticals was charged with insider trading following positive data on the company's cancer drug.