U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23559 / June 6, 2016
Securities and Exchange Commission v. Richard Grossman, Civil Action No. 1:16-mc-01189 (GMH) (D.D.C. filed June 6, 2016)
SEC Asks Court to Order New York Resident to Testify in Insider Trading Investigation
The Securities and Exchange Commission today announced that it has filed a subpoena enforcement action in the U.S. District Court for the District of Columbia against Richard Grossman, a resident of West Hempstead, New York.
According to the SEC's application and supporting papers, the SEC is investigating potential violations of the federal securities laws arising from suspicious trading in the securities of ophthalmology research and development company Ohr Pharmaceutical, Inc. The SEC's application alleges that Grossman, a former business partner of an Ohr director and an acquaintance of an Ohr officer, sold 10,834 shares of Ohr common stock the day before the company announced disappointing results from an exploratory study evaluating the potential of Ohr's lead product as a treatment for the wet form of age-related macular degeneration. At the time that Grossman traded, Ohr directors and officers had been informed of the study results. The day of the announcement, Ohr common stock closed at $2.74, down $5.99 or approximately 68.6 percent from the previous day's close. As a result of his trades, Grossman avoided losses of approximately $60,000.
As part of the SEC investigation, the staff in the SEC's Washington, D.C. headquarters served Grossman with an SEC subpoena in April 2016, requiring the production of certain documents and compelling his testimony. According to the SEC's application, an attorney representing Grossman told the staff that he would advise his client not to comply with the subpoena absent a court order.
The SEC's application seeks an order from the federal district court compelling Grossman to comply with the SEC's subpoena by producing documents and appearing for testimony. The SEC is continuing its fact-finding investigation and, to date, has not concluded that any individual or entity has violated the federal securities laws.
Application of Securities and Exchange Commission for an Order to Show Cause and an Order Requiring Compliance with Commission Subpoena