Steven D. Targum et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26070 / August 8, 2024
Securities and Exchange Commission v. Steven D. Targum et al., No. 1:24-cv-12043 (D. Mass. filed August 8, 2024)
SEC Charges Massachusetts Residents with Insider Trading
The Securities and Exchange Commission filed insider trading charges today against Massachusetts residents Steven D. Targum, Elliot P. Targum, and Nicholas J. Rosenberg, who collectively avoided losses of about $110,000 from trading in advance of the February 13, 2023 announcement of negative clinical drug trial news by biotechnology company Frequency Therapeutics, Inc. Each has offered to settle the SEC’s action. Among other things, they have agreed to pay a total of over $230,000 in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
According to the SEC’s complaint, Steven Targum, who worked as a consultant to Frequency Therapeutics and was subject to a confidentiality agreement with the company, obtained material nonpublic information about the disappointing results of a clinical trial for Frequency Therapeutics’ leading drug product. Steven Targum learned this information through emails from senior company officers sent to him on February 4, 2023. The complaint alleges that the next business day, February 6, 2023, Steven Targum placed an order to sell all of his Frequency Therapeutics shares, and also placed calls to his son, Elliot Targum, and conveyed material non-public information to Elliot about the negative results of the clinical trial. According to the complaint, about six minutes after ending a call with his father, Elliot Targum submitted an order to sell about half of his Frequency Therapeutics shares and called his close friend, Nicholas Rosenberg, and conveyed material non-public information to Nicholas Rosenberg about Frequency Therapeutics. As alleged in the complaint, within two hours of ending his call with Elliot Targum, Nicholas Rosenberg submitted an order to sell all of the Frequency Therapeutics shares in one of his brokerage accounts, and sold all of his remaining Frequency Therapeutics shares two days later. The SEC alleges that Steven Targum avoided losses of $86,750, Elliot Targum avoided losses of $8,376, and Nicholas Rosenberg avoided losses of about $15,323 when Frequency Therapeutics’ share price dropped 80.6% after the negative study results were made public on February 13, 2023.
The SEC’s complaint, filed in U.S. District Court for the District of Massachusetts, charges Steven Targum, Elliot Targum, and Nicholas Rosenberg with violating Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. Without admitting or denying the allegations, Steven Targum, Elliot Targum, and Nicholas Rosenberg consented to judgments permanently enjoining them from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; ordering Steven Targum to pay disgorgement of $86,750, prejudgment interest of $8,514.20, and a civil penalty of $86,750, and imposing an officer-and-director bar; ordering Elliot Targum to pay disgorgement of $8,376, prejudgment interest of $822.09, and a civil penalty of $8,376, and imposing a five-year officer-and-director bar; and ordering Nicholas Rosenberg to pay disgorgement of $15,323, prejudgment interest of $1,503.90, and a civil penalty of $15,323. The judgments are subject to court approval.
The SEC’s investigation was conducted by Dawn Edick, Kathleen Shields, and Amy Gwiazda of the SEC’s Boston Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.