For one financial adviser, the urge to profit off Sanofi’s $1.9 billion Kadmon buyout allegedly proved too powerful to resist.
The Securities and Exchange Commission (SEC) has charged California-based executive compensation consultant Frank Glassner with insider trading, according to a complaint filed in a federal Manhattan court Tuesday.
Glassner was a long-time consultant to Kadmon who was enlisted to provide acquisition-related services to the biotech, SEC said in a release.
Sanofi in September said it was paying $1.9 billion in cash to acquire the company, which had recently scored a first-in-class approval for its transplant rejection med Rezurock. Sanofi’s Kadmon deal closed in November.
Within “thirty minutes of first learning about the planned acquisition,” Glassner allegedly reactivated a dormant brokerage account, SEC claims. Over the next three weeks, he leveraged insider information about the buyout to snap up Kadmon stock and call options in advance of the acquisition’s unveiling. This allowed Glassner to “reap illicit profits totaling approximately $405,000,” SEC said.
At the same time SEC filed its complaint in Manhattan, the U.S. Attorney’s Office for the Southern District of New York unveiled criminal charges against Glassner.
This is hardly the first time biopharma M&A has led to alleged financial malfeasance. In August, SEC said it was charging Medivation’s former head of business development, Matthew Panuwat, with insider trading ahead of his company’s $14 billion acquisition by Pfizer in 2016.
Just days before Pfizer and Medivation disclosed their merger plans on Aug. 22, 2016, Panuwat allegedly bought short-term, out-of-the-money stock options in Incyte Corporation, which was comparable in size to Medivation and had a similar cancer bent, the SEC said in a complaint.
The complaint alleged Panuwat knew investment bankers had flagged Incyte as a similar company and expected the Pfizer deal to fuel an increase in Incyte’s stock price.
In late September, meanwhile, SEC alleged former Goldman Sachs compliance analyst Jose Luis Casero Sanchez enriched himself by more than $70,000 by using privileged information about Jazz Pharmaceuticals’ takeover of GW Pharmaceuticals. In addition, Sanchez allegedly made more than $7,000 on his purchase and sale of stock surrounding Horizon Therapeutics’ Viela Bio buyout.