SEC Charges Former ImClone CEO Samuel Waksal With Illegal Insider Trading

FOR IMMEDIATE RELEASE
2002-87

Washington, D.C., June 12, 2002 -- The Securities and Exchange Commission today filed charges against Samuel Waksal, the former CEO of ImClone Systems Inc., for illegal insider trading. In its complaint, the Commission charges that Waksal received disappointing news late last December that the U.S. Food and Drug Administration would soon issue a decision rejecting for review ImClone's pending application to market its cancer treatment drug, Erbitux. The SEC further charges that Waksal told this negative information to certain family members who sold ImClone stock before the news became public and that Waksal himself tried to sell shares of ImClone before the news became public.

In its lawsuit, filed in federal court in Manhattan, the Commission seeks an order requiring that Waksal disgorge the several million dollars in losses avoided by those family members he tipped, and that he pay civil penalties and prejudgment interest. It also seeks an order permanently enjoining Waksal from violating the securities laws, and barring him from acting as an officer or director of a public company.

Specifically, the Commission's complaint alleges as follows.

• On the evening of Dec. 26, 2001, Waksal learned that on Dec. 28, 2001, the FDA would issue a Refusal to File (RTF) letter to ImClone rejecting consideration of its Biologics Licensing Application for Erbitux.
   
• The same evening and early the next morning, Waksal called certain family members to alert them that ImClone would be receiving this bad news.
   
• As soon as the market opened the next morning, Dec. 27, these family members sold more than $9 million of ImClone stock. In total they sold more than $10 million of ImClone stock over the next two days.
   
• Also starting that evening, Dec. 26, and through Dec. 28, Waksal himself tried to sell 79,797 shares of ImClone stock worth nearly $5 million. He was unable to do so only because two different broker-dealers would not execute the orders.
   
• As expected, the FDA faxed ImClone the RTF letter at about 4 p.m. on Dec. 28, 2001. At 6 p.m. that day, ImClone publicly announced the FDA decision. By the close of trading on Dec. 31, the next trading day, ImClone's stock price had dropped 16%, from $55.25 to $46.46.
   
• By selling before the announcement that ImClone had received an RTF letter from the FDA, Waksal family members avoided losses of several million dollars.

The Commission's complaint alleges that based on this conduct, Waksal violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission's investigation is ongoing. The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York in the investigation of this matter.