SEC Settles with Biotech Insider Trader
Litigation Release No. 24406 / February 21, 2019
Securities and Exchange Commission v. Joseph Frank Vacante, No. 19-civ-1616 (S.D.N.Y. filed Feb. 21, 2019)
The Securities and Exchange Commission today charged a former employee of a biotech company with insider trading on confidential information regarding the company's withdrawal of certain products from consideration by the U.S. Food and Drug Administration (FDA).
The former employee of Trinity Biotech plc, Joseph Frank Vacante, agreed to pay more than $140,000 to settle the SEC's charges.
According to the SEC's complaint, on September 29, 2016, Vacante learned that the FDA had recommended that Trinity withdraw two products which Vacante believed represented the future of the company. The complaint further alleges that, that same day, Vacante twice communicated with his broker in efforts to sell Trinity American Depository Receipts (ADRs) which he had received as part of his employment, including lowering the price to ensure the sale occurred. On October 4, 2016, Trinity announced that it was withdrawing the two products from FDA consideration. At the close of trading that day, Trinity's ADRs closed more than 50% lower than the prior day's closing price. The SEC alleges that, by selling his ADRs before Trinity's announcement, Vacante avoided a loss of over $70,000.
The SEC's complaint, filed in federal court in Manhattan, charges Vacante with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Vacante has consented to the entry of a final judgment permanently enjoining him from violating the charged provisions of the federal securities laws and ordering him to pay disgorgement of $70,827 plus interest of $6,247 and a civil penalty of $70,827. The settlement is subject to court approval.
The SEC's investigation was conducted by Elisabeth Grimm with assistance from trial counsel Suzanne Romajas and supervised by David Frohlich and Carolyn M. Welshhans. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.