SEC Obtains Final Judgment Against Former Biotech Executive in Insider Trading Case
Litigation Release No. 24217 / July 26, 2018
Securities and Exchange Commission v. Robert Gadimian, No. 1:16-cv-11955 (D. Mass.)
On July 16, 2018, a federal court in Boston, Massachusetts entered final judgment against the former senior director of regulatory affairs for Puma Biotechnology, Inc., who was charged with insider trading ahead of two company announcements regarding cancer drug trials.
The SEC alleged that Robert Gadimian pocketed more than $1.1 million in illicit profits by secretly purchasing Puma stock and short-term call options based on nonpublic information that he learned about positive developments in two clinical trials for Puma's cancer drug, neratinib. Gadimian allegedly bought Puma securities before the results from the first trial were announced in December 2013, and again before the results of the second trial were announced in July 2014.
In a parallel case, the U.S. Attorney's Office for the District of Massachusetts brought criminal insider trading charges against Gadimian for the same conduct alleged in the SEC's Complaint. Gadimian pleaded guilty, he was ordered to forfeit his illegal profits of $1,161,000, and he was sentenced to 27 months in prison, plus 24 months of supervised release and a $25,000 fine.
After pleading guilty, Gadimian agreed to settle the SEC's case. Under the settlement, which the court approved in the final judgment, Gadimian was permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and he was held liable for disgorgement of $1,161,000, which was deemed satisfied by the order of forfeiture in the criminal case.
The SEC's investigation and litigation were conducted by Timothy K. Halloran, with assistance from Martin L. Zerwitz and Michael C. Baker. The matter was supervised by Stacy L. Bogert, Deborah A. Tarasevich, Cheryl L. Crumpton, and Antonia Chion. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Massachusetts, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority. For more information, see Litigation Release No. 23662 (Sept. 29, 2016).