U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21370 / January 11, 2010
Securities and Exchange Commission v. Brooke D. Wagner, No. 10-CV-10031 (District of Massachusetts, filed January 11, 2010)
SEC Files Settled Insider Trading Charges Against Massachusetts Resident
The Securities and Exchange Commission today filed a settled civil injunctive action alleging insider trading against Brooke D. Wagner, former Vice President of Corporate Communications at Indevus Pharmaceuticals, Inc. (now known as Endo Pharmaceuticals, Inc.), a biotechnology company based in Lexington, Massachusetts. Wagner has agreed to pay a total of over $130,000 in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties to settle the charges.
The Commission's complaint, filed in federal district court in Boston, Massachusetts, alleges that Wagner sold shares of Indevus stock upon learning material non-public information that would have a negative effect on Indevus's stock price. According to the Commission's complaint, on June 4, 2008, Indevus announced that the United States Food and Drug Administration (FDA) had expressed concerns about a potential side effect of a drug for which Indevus was seeking FDA approval, and, as a result, the approval process would be delayed by at least 18 months. On the date of the announcement, the closing price of Indevus stock fell $2.84 per share from the prior day's closing price of $4.10 per share to $1.26 per share, a decline of 69%. The complaint alleges that Wagner and others at Indevus first learned of the FDA's concerns on May 30, 2008, and, on the same day, Wagner entered an order to sell all of his Indevus holdings. The complaint further alleges that, later that day, and again on June 2, 2008, Wagner executed "short sales" of Indevus stock. A "short sale" is a sale of shares that the seller does not own but commits to buying at a later date with the expectation that the share price will drop, thereby allowing the seller to buy shares to "cover" the transaction at a lower price and earn a profit. Wagner purchased shares of Indevus stock to cover his short sales two days after the announcement.
Wagner has agreed to settle this matter, without admitting or denying the allegations in the Commission's complaint, on the following terms. He has consented to the entry of a permanent injunction prohibiting him from violating 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. Additionally, Wagner will disgorge ill-gotten gains of $64,190.46, plus prejudgment interest thereon of $4,741.57, and he will pay a civil monetary payment of $64,190.46.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority in this matter.
See Also: SEC Complaint