U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21103 / June 24, 2009
Securities and Exchange Commission v. Richard F. Selden, Civil Action No. 05-11805 (D. Mass.) (Gorton, J.)
Court Bars Former CEO of a Massachusetts Biotechnology Company From Serving as an Officer or Director of a Public Company for Two Years
The Securities and Exchange Commission today announced that on June 24, 2009, a United States District Court Judge for the District of Massachusetts found that Richard F. Selden of Lincoln, Massachusetts "is presently unfit to serve as an officer or director of a public company" and barred Selden from acting in such a role for two years. Selden was the former CEO of Transkaryotic Therapies ("TKT"), a biotechnology company that was headquartered in Cambridge, Massachusetts, and was publicly-traded until it was acquired in July 2005. The Commission filed an enforcement action against Selden in September 2005 alleging that he made misleading statements about TKT's flagship drug. On July 8, 2008, the Court entered a final judgment by consent against defendant Selden, enjoining him from violating the antifraud and other provisions of the federal securities laws and ordering him to pay a $125,000 civil penalty and $1,041,417 in disgorgement and prejudgment interest related to his sales of TKT stock during the period of the alleged fraud, but leaving the issue of an officer and director bar open to a later decision by the Court.
Selden was the only defendant in a civil injunctive action filed on September 1, 2005, alleging that he made materially misleading statements between October 2000 and October 2002 concerning results of TKT's clinical trials and its U.S. Food and Drug Administration ("FDA") application for its flagship drug, Replagal. The Commission's complaint alleged that, during the relevant time period, Selden and, at his direction, TKT, made positive statements concerning Replagal's clinical benefits, describing its clinical trials as a success, and made positive statements about Replagal's chance of being approved by FDA. However, the complaint alleged that Selden knew, but failed to disclose, material negative information, including that Replagal's clinical trial failed to meet its primary objective and FDA had told TKT on several occasions that it was a failed study and had recommended additional clinical trials. The complaint further alleged that Selden benefited by selling 90,000 shares of TKT stock between May 2001 and February 2002, prior to TKT's disclosure of some negative information about Replagal on October 2, 2002, which caused TKT's stock price to fall.