5 years after Pfizer buyout, SEC charges Medivation's former deal-making lead with insider trading

Gavel on top of cash
Medivation's Matthew Panuwat pocket $107,066 in “illicit profits,” the Securities and Exchange Commission claims. (alfexe / iStock / Getty Images Plus)

What not to do when you learn your company is about to be bought out by Pfizer? Load up on stock options in a similar biopharma days before the announcement is made official.

Matthew Panuwat, Medivation's former head of business development, is learning that lesson the hard way. The U.S. Securities and Exchange Commission (SEC) on Tuesday said it was charging Panuwat with insider trading ahead of his company’s acquisition by Pfizer, which paid $14 billion for oncology-focused Medivation in 2016.

Just days before Pfizer and Medivation unveiled their merger plans on Aug. 22, 2016, Panuwat 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 former business development lead allegedly bought the options “within minutes of learning highly confidential information concerning the merger,” SEC said in a release. The complaint alleges 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.

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Medivation’s insider trading policy “expressly forbade” Panuwat from using confidential information to trade in securities of other public companies, the SEC’s complaint says.

Following the merger announcement, Incyte’s stock price swelled by around 8%, helping Panuwat pocket $107,066 in “illicit profits,” the agency says.

Panawut is being charged with violating antifraud provisions of the federal securities laws. The SEC’s complaint seeks a permanent injunction, civil penalty and an officer and director bar.

"Biopharmaceutical industry insiders frequently have access to material nonpublic information about mergers, drug trials, or regulatory approvals that impacts the stock price of not only their company but also other companies in the industry," Gurbir Grewal, director of the SEC's enforcement division, said in a statement. The SEC is “committed” to rooting out illegal trading “in all forms,” he added.

This isn’t the first insider trading snarl related to the Pfizer and Medivation deal. Back in 2016, the SEC said David Hobson, a former investment adviser at Oppenheimer & Co., used information from a friend, Michael Maciocio, to profit from illegal trades. Maciocio worked at Pfizer and was later terminated after an investigation by the company.

M&A targets, including Pfizer’s plans for Medivation, were at the center of the case, the SEC said. A court sentenced Hobson to six months of prison in 2017.

Editor's note: This story was updated with additional background on 2016 insider trading charges against David Hobson.