Litigation Release No. 17684 / August 15, 2002

SEC CHARGES FORMER GENENTECH EMPLOYEE WITH INSIDER TRADING

Securities and Exchange Commission v. Lei Wang, United States District Court for the Northern District of California, Civil Action No. C-02-3941 CW

The Securities and Exchange Commission ("Commission") today charged that a former Genentech, Inc. employee engaged in insider trading when she sold stock after learning, as part of her job, that a clinical drug trial had been unsuccessful. Simultaneous with the filing of the Commission's complaint, and without admitting or denying the allegations, defendant Lei Wang, age 32 of South San Francisco, California, consented to a court order enjoining her from future violations of the securities laws and ordering her to pay more than $76,000 in wrongful trading profits and penalties.

The complaint alleges that Wang, a computer programmer for Genentech, was responsible for analyzing the results of a clinical drug trial conducted jointly by Genentech and Xoma, Ltd., both San Francisco Bay Area biotechnology companies. On April 3, 2002, Wang learned that the joint trial, concerning the anti-psoriasis drug Xanelim, had been unsuccessful. Over the next two days, and before Genentech and Xoma released the negative results to the public, Wang sold 4,400 shares of Xoma stock, and also short sold an additional 14,407 shares. On April 5, when Genentech and Xoma publicly announced the trial results, Xoma stock declined 42% to close at $4.42. As a result, Wang realized illegal trading profits of $50,982.10.

In order to settle the charges, in her settlement offer Wang agreed to pay a total of $76,738.06, consisting of illegal trading profits of $50,982.10 plus prejudgment interest of $264.91and a penalty of $25,491.05, equal to one-half her profits. She also agreed to the entry of a permanent injunction prohibiting her from violations of the antifraud provisions of the securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In accepting Wang's settlement, the Commission took into account her significant cooperation in the staff's investigation, including the fact that she voluntarily came forward early in the investigation, reported her trades and worked promptly with the staff to resolve the matter.