SEC v. Clovis Oncology, Inc., et al.
Case No. 18-cv-02381-CMA (D. Colo.)

On September 18, 2018, the Commission filed a complaint (the “Complaint”) against Clovis Oncology, Inc. (“Clovis”) and Patrick J. Mahaffy (“Mahaffy”), its Chief Executive Officer, and Erle T. Mast (“Mast”), its former Chief Financial Officer (collectively, the “Defendants”). The Complaint alleged that over a four-month period starting in July 2015, Clovis and Mahaffy misled investors about how well Clovis' flagship lung cancer drug Rociletinib (“Roci”) worked compared to another drug. Clovis raised approximately $298 million in a public stock offering in July 2015, but saw its stock price collapse in November 2015 after disclosing that the effectiveness rate was actually 28 percent, versus the 60 percent efficacy figure that had been touted in the company's investor presentations, press releases, and SEC filings. The company stopped development on the drug in May 2016. See Complaint.

The Defendants were ordered, and have paid, a total of $20,804,145 in disgorgement, prejudgment interest, and penalties to the Commission. The Commission was ordered to hold all funds, together with interest and income earned thereon, pending further order of the Court. See Clovis’ Final Judgment, Mahaffy’s Final Judgment, and Mast’s Final Judgment.

On July 2, 2019, the Court established a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid, along with the disgorgement and prejudgment interest, can be distributed to investors harmed by the Defendants’ conduct described in the Complaint. The Court also appointed Miller Kaplan Arase LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund. See the Court’s Order.