SEC Charges Pharma Insider and Two Relatives with Insider Trading

Litigation Release No. 25458 / July 28, 2022

Securities and Exchange Commission v. Mark Klein, et al., No. 22-cv-6426 (S.D.N.Y. filed July 28, 2022)

The Securities and Exchange Commission today charged Dr. Pablo Rubinstein, Eduardo Rubinstein, and Mark Klein for insider trading in the securities of Ampio Pharmaceuticals, Inc. before a negative announcement concerning one of the company's flagship developmental drugs on August 7, 2018.

According to the SEC's complaint, filed in federal district court in Manhattan, on August 3, 2018, Pablo Rubinstein, a scientific advisor to Ampio, learned that the U.S. Food and Drug Administration had concluded that the clinical study for Ampio's developmental drug Ampion was not adequate and well-controlled. The SEC alleges that Pablo Rubinstein then unlawfully passed that information - before it was publicly disclosed - to his brother, Eduardo Rubinstein, who sold more than 103,000 shares of Ampio stock (nearly all of his Ampio holdings) based upon that information. Minutes after selling his own shares, Eduardo Rubinstein, in turn, allegedly passed that nonpublic information to his son-in-law, Mark Klein, who promptly sold his entire position of 100,000 shares of Ampio stock. As a result of their sales prior to the FDA's negative conclusions being made public, Eduardo Rubinstein and Mark Klein avoided losses of approximately $226,000 and $207,000, respectively.

The SEC's complaint charges Pablo Rubinstein, Eduardo Rubinstein, and Mark Klein with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5 and Section 17(a) of the Securities Act of 1933, and seeks injunctive relief and civil penalties against them. Without admitting or denying the allegations in the SEC's complaint, Pablo Rubinstein has agreed to the entry of a final judgment that would permanently enjoin him from violating the charged provisions and order him to pay a civil penalty of approximately $226,000. The settlement is subject to court approval.

The SEC's investigation, was conducted by Frank Goldman, with assistance from John Rymas in the Market Abuse Unit's Analysis and Detection Center. The case has been supervised by Joseph Sansone, Chief of the Market Abuse Unit, and Danielle Voorhees. The SEC's litigation will be led by Mark Williams, Ian Kellogg, and Mr. Goldman. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.