U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20640 / July 10, 2008
Securities and Exchange Commission v. Richard F. Selden, Civil Action No. 05-11805 (D. Mass.) (Gorton, J.)
Richard F. Selden, Former CEO of a Massachusetts Biotechnology Company, Settles SEC Fraud Action
The Securities and Exchange Commission today announced that on July 9, 2008, a final judgment by consent was entered by the United States District Court Judge for the District of Massachusetts against Richard F. Selden of Lincoln Massachusetts. Selden, age 49, was the former CEO of Transkaryotic Therapies ("TKT"), a biotechnology company that was headquartered in Cambridge, Massachusetts, and was publicly-traded until it was acquired in July 2005. The final judgment against Selden permanently enjoins him from violating the antifraud and other provisions of the federal securities laws, and orders Selden to pay a $125,000 civil penalty and $1,041,417 in disgorgement and prejudgment interest related to his sales of TKT stock during the period of the alleged fraud.
Selden was the only defendant in a civil injunctive action filed in September 2005, alleging that he made materially misleading statements between October 2000 and October 2002 concerning results of TKT's clinical trials and its U.S. Food and Drug Administration ("FDA") application for its flagship drug, Replagal. The Commission's complaint alleged that, during the relevant time period, Selden and, at his direction, TKT, made positive statements concerning Replagal's clinical benefits, describing its clinical trials as a success, and made positive statements about Replagal's chance of being approved by FDA. However, the complaint alleged that Selden knew, but failed to disclose, material negative information, including that Replagal's clinical trial failed to meet its primary objective and FDA had told TKT on several occasions that it was a failed study and had recommended additional clinical trials. The complaint further alleged that Selden benefited by selling 90,000 shares of TKT stock between May 2001 and February 2002, prior to TKT's disclosure of some negative information about Replagal on October 2, 2002, which caused TKT's stock price to fall.
The judgment against Selden, to which he consented without admitting or denying the Commission's allegations, enjoin him from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and enjoin him from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, 13a-13 thereunder. Additionally, Selden agreed to pay a civil penalty of $125,000. Selden was also held liable for $714,800 in disgorgement related to his trading in TKT stock during the relevant time period, plus $326,617 in prejudgment interest. The Court will determine whether a bar from serving as an officer or director of any public company is warranted against Selden at a later date.
For further information about the Commission's action in SEC v. Selden, see Litigation Release No. 19357 (September 1, 2005).