The Securities and Exchange Commission is looking harder at SAC Capital Advisors to see if there is a connection to insider trading on InterMune ($ITMN) stock, Bloomberg reports.
Citing a confidential source, the news service said the SEC is now investigating whether SAC may have benefited from insider information on trades of InterMune, a company whose former CEO was himself convicted of SEC-related violations. The company and federal investigators would not comment on the investigation, but the source says they are looking at trades made in early 2010. Bloomberg points out that SAC acquired nearly 2 million shares of InterMune in the first quarter of 2010 and had not held any shares in the company before. Shares jumped in March when FDA reviewers recommended InterMune's lung disease drug, then tanked a couple of months later when the regulatory agency turned it down, it says.
Former InterMune CEO Scott Harkonen was convicted in 2009 on charges of wire fraud for issuing a press release that overstated the effectiveness of Actimmune for treating idiopathic pulmonary fibrosis. He has appealed on free-speech grounds.
Federal investigators are looking into a number of hedge funds besides SAC as part of a broad probe into possible insider trading in drugmaker deals. Those include Merck's ($MRK) 2009 buyout of Schering-Plough; Pfizer's ($PFE) 2009 purchase of Wyeth; and AstraZeneca's ($AZN) takeover of MedImmune in 2007. In addition to SAC, authorities are said to be looking into Diamondback Capital Management, JANA Partners and Balyasny Asset Management.
A former portfolio manager at SAC Capital has been arrested for allegedly snagging a whopping $276 million in illicit gains after getting an insider tip from a leading Alzheimer's specialist about the 2008 failure of bapineuzumab, which had been a hot prospect for Alzheimer's. Also, SEC documents named John Lazorchak, the director of financial reporting at Celgene ($CELG), as a ringleader of an insider trading scheme, along with Mark Cupo, the director of accounting and reporting at Sanofi ($SNY), and Stryker's ($SYK) Mark Foldy, who worked in marketing.
- read the Bloomberg story
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