SEC Charges Former Pharmaceutical Company Employee with Insider Trading on Biotech Deals
The Securities and Exchange Commission today charged that a former employee of Takeda Pharmaceuticals International, Inc. traded on inside information about the Japanese firm’s business alliances and corporate acquisitions.
Brent Bankosky, a former Senior Director in Takeda’s U.S.-based business development group, has agreed to pay more than $136,000 to settle the SEC’s charges. The proposed settlement is subject to the approval of Judge Harold Baer, Jr. of the U.S. District Court for the Southern District of New York. Under the proposed settlement, the Court, upon motion by the Commission, will determine whether to impose an officer-and-director bar against Bankosky.
The SEC’s complaint, filed in federal court in Manhattan, alleges that Bankosky reaped more than $63,000 of profits, achieving a 169% rate of return, by trading on non-public information about two business transactions in 2008. Takeda’s business development group worked on the transactions, a strategic alliance with Cell Genesys, Inc., and the acquisition of Millennium Pharmaceuticals, Inc., which were referred to internally by their code names, Project Ceres and Project Mercury. Bankosky’s trading violated U.S. securities laws and Takeda’s policies, which forbade employees from disclosing or trading based on inside information.
“Brent Bankosky was entrusted with highly confidential information of Takeda and betrayed that trust to line his own pocket,” said George S. Canellos, Director of the SEC’s New York Regional Office. “His is another cautionary tale of an employee who succumbed to greed and the delusion that he wouldn’t get caught.”
Sanjay Wadhwa, Associate Director of the SEC’s New York Regional Office and Deputy Chief of the Market Abuse Unit, added, “We are determined to rid the U.S. marketplace of illegal insider trading, and we will pursue it wherever we find it, irrespective of whether it’s a hedge fund reaping millions of dollars in illicit gains or an individual investor hoping to fly under the radar by making relatively small insider trading profits.”
According to the SEC’s complaint, almost immediately after Bankosky joined Takeda in January 2008 as a Director in its business development group, he began to misuse confidential corporate information for his personal benefit. In February 2008, Bankosky began placing trades in his personal brokerage account based on non-public information about Takeda’s proposed strategic alliance with Cell Genesys, which was announced in March. Starting in March 2008, Bankosky made additional trades for his own account based on non-public information about Takeda’s plan to acquire Millennium, which was announced in April. Bankosky also traded on other confidential information in 2009 and 2010, purchasing call options in the securities of Arena Pharmaceutical, Inc., and AMAG Pharmaceutical, Inc., respectively, when the firms were engaged in confidential discussions on business transactions with Takeda. Bankosky, who was promoted to Senior Director of Takeda’s business development group in September 2010, resigned from Takeda in May 2011.
The SEC’s complaint charges Bankosky with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as Section 14(e) of the Exchange Act and Rule 14e-3. The complaint seeks a final judgment ordering Bankosky to pay a financial penalty and disgorge his ill-gotten gains plus prejudgment interest, preventing him from serving as an officer or director of a public company, and permanently enjoining him from future violations of those provisions of the federal securities laws.
The SEC’s investigation, which is continuing, has been conducted by Charles D. Riely and Amelia A. Cottrell – members of the SEC’s Market Abuse Unit in New York – and Layla Mayer of the SEC’s New York Regional Office.