U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18409 / October 14, 2003
UNITED STATES v. ANDREW S. MARKS (United States District Court for the District of Massachusetts, No. 03-10297 (DPW) (D.Mass.)
FORMER HIGH-RANKING ATTORNEY AT CAMBRIDGE BIOTECH COMPANY PLEADS GUILTY TO INSIDER TRADING CHARGE
The Commission announced today that, on October 3, 2003, Andrew S. Marks, of Wayland, Massachusetts, pled guilty to a one-count information filed by the U.S. Attorney for the District of Massachusetts charging him with unlawful insider trading in connection with his September 2001 sale of stock in Vertex Pharmaceuticals, Inc., a Cambridge-based biotechnology company. The criminal information alleged that Marks, who at the time was Vertex=s highest-ranking attorney, learned on September 20, 2001, that Vertex planned to announce the suspension of clinical trials of one of its promising drugs on September 24. According to the information, on September 21, Marks liquidated all of his Vertex stock despite having previously acknowledged in writing that the impending release would not be viewed favorably by Wall Street and that he should not sell his Vertex shares. Sentencing has been scheduled for December 16, 2003.
According to the criminal information, at the time he traded, Marks was the designated attorney for employees to contact regarding compliance with Vertex=s employee securities trading policy. In that capacity, the information alleged, Marks wrote Vertex=s CEO an email on September 20, advising him to make sure that an employee who had requested permission to trade had no knowledge of the impending press release. According to the information, Marks= email went on to say:
. . . I guess I am troubled about any employee trading prior to that release because it is likely to have an effect on the stock (looks like I can=t sell any shares) and, depending on the degree of that effect, could create the perception of insider trading. . . .
The criminal information alleged that, on September 21, less than 24 hours after writing this email to the CEO, Marks sold 20,900 shares of Vertex at an average price of $22.81 per share, receiving $476,765. According to the information, Marks traded in breach of a fiduciary duty not to trade in Vertex=s stock while in possession of material, nonpublic information regarding Vertex. As a result of the conduct described in the information, the U.S. Attorney charged Marks with criminal violations of the antifraud provisions of federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Commission previously filed a complaint against Marks in connection with the same conduct in Massachusetts federal court on December 3, 2002, alleging that Marks violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. In that action, which is still pending, the Commission seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties, and further seeks an order barring Marks from acting as an officer or director of any publicly-traded company. For further information, see Litigation Release Nos. 17871 (December 3, 2002) and 18360 (September 24, 2003).