SEC Settles with Biotech Insider Trader
The SEC charged on February 21, 2019, Joseph Frank Vacante, a former employee of a biotech company with insider trading on confidential information regarding the company’s withdrawal of certain products from consideration by the U.S. FDA.
Joseph Frank Vacante agreed to pay more than $140,000 to settle the SEC’s charges.
According to the SEC’s complaint, on September 29, 2016, Joseph Frank Vacante learned that the FDA had recommended that Trinity withdraw two products which Joseph Frank Vacante believed represented the future of the company. The complaint further alleges that, that same day, Joseph Frank Vacante twice communicated with his broker in efforts to sell Trinity American Depository Receipts (ADRs) which he had received as part of his employment, including lowering the price to ensure the sale occurred. On October 4, 2016, Trinity announced that it was withdrawing the two products from FDA consideration. At the close of trading that day, Trinity’s ADRs closed more than 50% lower than the prior day’s closing price. The SEC alleges that, by selling his ADRs before Trinity’s announcement, Joseph Frank Vacante avoided a loss of over $70,000.
The SEC’s complaint, filed in federal court in Manhattan, charges Joseph Frank Vacante with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Joseph Frank Vacante has consented to the entry of a final judgment permanently enjoining him from violating the charged provisions of the federal securities laws and ordering him to pay disgorgement of $70,827 plus interest of $6,247 and a civil penalty of $70,827. The settlement is subject to court approval.
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