U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19039 /January 19, 2005
SECURITIES AND EXCHANGE COMMISSION V. SAMUEL D. WAKSAL AND JACK WAKSAL, DEFENDANTS, AND PATTI WAKSAL, RELIEF DEFENDANT, 02-CIV-4407 (RJH)(S.D.N.Y.)
FORMER IMCLONE CEO SAMUEL WAKSAL AND FATHER TO SETTLE INSIDER TRADING CASE
Samuel D. Waksal and Jack Waksal have consented to a final resolution of the Commission's insider trading case against them. Pursuant to this settlement, which is subject to the Court's approval, Sam Waksal and Jack Waksal will be held jointly and severally liable for disgorgement of over $2 million in illegal loss avoidance, including prejudgment interest, and Sam Waksal will be liable for a civil penalty of over $3 million. In March 2003, Sam Waksal consented to a partial resolution of this case in which he disgorged over $800,000 in illegal insider trading loss avoidance and profits, including prejudgment interest on those amounts and to be permanently barred from acting as an officer or director of any public company.
The Commission originally filed insider trading charges against Sam Waksal on June 12, 2002 in the United States District Court for the Southern District of New York and added Jack Waksal as a defendant on October 10, 2003. In its complaint, the Commission charged that in late December 2001, Sam Waksal received disappointing news about ImClone, that the United States Food and Drug Administration was expected to soon issue a decision rejecting for review ImClone's pending application to market its cancer treatment, Erbitux. Before this news became public: (1) Sam Waksal tried to sell a substantial amount of his own ImClone stock; (2) Sam Waksal caused his daughter Aliza Waksal to sell all of her ImClone stock; (3) Sam Waksal purchased ImClone put option contracts; and (4) Sam Waksal told this negative information to Jack Waksal, who in turn sold ImClone stock in his own brokerage accounts and in the brokerage account of his daughter, Patti Waksal. The Commission's complaint alleged that based on this conduct, both Sam Waksal and Jack Waksal violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Sam Waksal also violated Section 16(a) of the Exchange Act and Rule 16a-3 thereunder.
Sam Waksal and Jack Waksal have agreed to a final resolution, subject to the Court's approval, of all of the charges in the complaint. Without admitting or denying the allegations, Sam Waksal has consented to the entry of a final judgment against him, holding him jointly and severally liable with Jack Waksal for disgorgement of over $2 million and ordering him to pay a civil penalty of $3,017,464 million. Sam Waksal previously paid over $800,000 in disgorgement and prejudgment interest for illegal insider trading loss avoidance and profits in connection with the March 2003 partial settlement. Also in connection with the partial settlement, Sam Waksal consented to be: (a) permanently barred from acting as an officer or director of any public company; and (b) permanently enjoined from future violations of Section 17(a) of the Securities Act, Sections 10(b) and 16(a) of the Exchange Act and Rules 10b-5 and 16a-3 thereunder. Jack Waksal has consented to the entry of a final judgment in the Commission's action for his sales of ImClone stock on December 27 and 28, 2001 while in possession of the material non-public information that the FDA would soon issue a Refusal to File Letter on ImClone's Erbitux application. Jack Waksal has consented to: (a) disgorge $2,019,030 representing the losses he avoided by his sales of ImClone stock in his brokerage accounts and in the brokerage account of his daughter, Patti Waksal, plus prejudgment interest; and (b) a permanent injunction from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter.