SEC Charges Executive Compensation Consultant with Insider Trading
Lit. Release No. 25398 / May 24, 2022
Securities and Exchange Commission v. Frank B. Glassner, No. 1:22-CV-04254 (SDNY filed May 24, 2022)
The Securities and Exchange Commission today charged Frank B. Glassner, a California-based executive compensation consultant, with insider trading in advance of a corporate acquisition announcement by one of his clients, biopharmaceutical company Kadmon Holdings, Inc.
The SEC's complaint, filed in federal court in Manhattan, alleges that Glassner, a long-time consultant to Kadmon, learned about Kadmon's impending acquisition by global biopharmaceutical company Sanofi S.A. in the course of his engagement to provide acquisition-related consulting services to Kadmon. According to the SEC's complaint, Glassner, within thirty minutes of first learning about the planned acquisition, reactivated access to a dormant brokerage account. Over the next three weeks, he used this confidential information to purchase Kadmon stock and call options in advance of the acquisition announcement on September 8, 2021, and to reap illicit profits totaling approximately $405,000. Glassner's alleged misconduct was detected by the SEC's Market Abuse Unit, which uses data analysis tools to uncover a variety of fraudulent trading schemes.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Glassner.
The SEC's complaint charges Glassner with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks a permanent injunction, disgorgement plus prejudgment interest, and a civil penalty.
The SEC's investigation was conducted by Cynthia A. Matthews and Frank Milewski of the SEC's New York Regional Office and by John Rymas, John D. Marino, and Simona Suh of the Market Abuse Unit. The investigation was supervised by Market Abuse Unit Chief Joseph G. Sansone. The SEC's litigation will be led by Ms. Matthews and Ms. Suh. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.