U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23125 / October 31, 2014
Securities and Exchange Commission v. Sasan Sabrdaran and Farhang Afsarpour, Civil Action No. 3:14-cv-4825
SEC Charges Former Pharmaceutical Company Executive and Friend with Insider Trading
The Securities and Exchange Commission today announced insider trading charges against a former pharmaceutical company executive and his longtime close friend who allegedly generated more than $1 million in illicit profits trading on nonpublic information as the company progressed toward regulatory approval to market one of its drugs.
The SEC alleges that Sasan Sabrdaran, the former director of drug safety risk management at Brisbane, Calif.-based InterMune Inc., tipped Farhang Afsarpour with confidential details while he was involved with shepherding the company's application before a European Union regulatory body to market a drug called Esbriet to be used for the treatment of patients with a type of fatal lung disease. Afsarpour, a restaurant owner in the United Kingdom, traded on the inside tips that Sabrdaran communicated to him about the progress of Esbriet's EU marketing application by purchasing securities in his own accounts and using money obtained from friends to trade on their behalf.
According to the SEC's complaint filed yesterday in U.S. District Court in the Northern District of California, InterMune submitted its marketing application to the European Medicines Agency in March 2010. While in possession of material nonpublic information received from Sabrdaran, Afsarpour placed orders in early December 2010 through a UK-based spread betting firm to buy spread bets on InterMune securities. A spread bet is purchased from a counterparty in order to have the opportunity to profit from changes in the price of an underlying asset, which in this case was InterMune common stock and call options being traded on U.S. exchanges. Besides the spread bet orders, Afsarpour also bought InterMune common stock.
The SEC's complaint alleges that Afsarpour urged approximately a dozen friends to purchase InterMune securities, and some gave him money that he used to buy spread bets on their behalf through his personal account. Afsarpour also tipped two other friends who traded on their own. InterMune announced in mid-December 2010 that the EMA advisory subcommittee assessing the application had issued a positive opinion for Esbriet, causing InterMune's stock and options prices to soar.
The SEC's complaint charges Sabrdaran and Afsarpour with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks disgorgement, prejudgment interest, and financial penalties as well as injunctions. The SEC also seeks an officer-and-director bar against Sabrdaran.
The SEC's investigation was conducted by Nina B. Finston and Drew Panahi, and supervised by Scott W. Friestad. The SEC's litigation will be led by Kenneth W. Donnelly and James E. Smith. The SEC appreciates the assistance of the United Kingdom's Financial Conduct Authority.