SEC Obtains Final Judgments Against Former AVEO Pharmaceuticals Executives
Litigation Release No. 24062 / March 5, 2018
Securities and Exchange Commission v. AVEO Pharmaceuticals, Inc., et al., Civil Action No. 1:16-cv-10607-NMG (D. Mass. March 29, 2016)
A federal district court in Boston, Massachusetts has entered final consent judgments in a fraud case brought by the Securities and Exchange Commission against the former CEO and former Chief Medical Officer of Massachusetts-based biotech company AVEO Pharmaceuticals, Inc.
In its First Amended Complaint, filed on September 1, 2016, the SEC alleged that AVEO and its former CEO, Tuan Ha-Ngoc, former CFO, David Johnston, and former Chief Medical Officer, William Slichenmyer misled investors about the company's communications with the Food and Drug Administration concerning the approval status of AVEO's flagship drug candidate, tivozanib. The SEC alleged that the defendants misled the public by intentionally withholding their knowledge that, due to concerns about patient death rates in an earlier tivozanib clinical trial, the FDA staff had recommended an additional clinical trial, which would likely have entailed millions of dollars in additional expenses and a multi-year delay in tivozanib's FDA approval process.
On December 8, 2017, the court entered a final consent judgment against Ha-Ngoc, ordering him to pay a civil penalty of $80,000 and enjoining him from future violations of Section 17(a)(2) and (3) of the Securities Act of 1933 and Rule 13a-14 under the Securities Exchange Act of 1934.
On February 12, 2018, the court entered a final consent judgment against Slichenmyer, ordering him to pay disgorgement and prejudgment interest of $2,835.54 and enjoining him from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. After a contested hearing, in an order entered March 1, 2018, the court also ordered Slichenmyer to pay a civil penalty of $50,000.
AVEO previously paid a $4 million penalty to settle the SEC's charges without admitting or denying the allegations in its complaint. The litigation against Johnston is ongoing.
For further information, see Litigation Release No. 23503.