Former ImClone CEO Samuel Waksal to Pay More than $800,000 in SEC Insider Trading Case


Partial Resolution also Includes Officer and Director Bar, New Insider Trading Charges

Washington, D.C., March 11, 2003 ; Samuel Waksal, the former CEO of ImClone Systems Inc., has agreed to a partial resolution of the insider trading case brought against him by the Securities and Exchange Commission. In documents filed today with the federal court in Manhattan, Waksal, without admitting or denying the allegations, consented to pay more than $800,000 from the unlawful sales including prejudgment interest, be barred from acting as an officer or director for public companies, and accept other relief. If approved by the court, the partial final judgment will resolve many of the insider trading charges alleged in the Commission's complaint, including new charges that Waksal unlawfully bought ImClone put options through a Swiss account in December 2001.

In its amended complaint filed today, the Commission alleges that in late December 2001, Waksal received disappointing news that the U.S. Food and Drug Administration was expected to soon issue a decision rejecting for review ImClone's pending application to market its cancer treatment drug, Erbitux. With that inside information in hand, and before ImClone publicly announced the FDA's decision on Dec. 28, 2001, Waksal:

  • Unlawfully tried to sell shares of ImClone worth nearly $5 million between Dec. 26 and 28;
  • Directed his daughter, Aliza, to sell all of her ImClone stock on Dec. 27;
  • Purchased 210 ImClone put option contracts through a Swiss account on Dec. 28; and
  • Tipped a family member, who sold his own ImClone stock as well as ImClone stock of another Waksal family member on Dec. 27 and 28.

The partial resolution announced today covers Waksal's attempted trades, the trades of his daughter, Aliza, and Waksal's purchase of ImClone puts. Waksal has consented to (a) injunctions against violating antifraud and other provisions of the federal securities laws; (b) pay $804,367, representing the losses avoided by the sales of ImClone stock in Aliza Waksal's account and Waksal's profits from his options transactions ($760,425), plus prejudgment interest ($43,942); and (c) a permanent bar from serving as an officer or director of a public company. In a separate criminal proceeding, Waksal has pleaded guilty to a variety of charges, including criminal charges arising out of his attempted sales of ImClone stock on Dec. 26-28, 2001, and sales of ImClone stock from the account of his daughter on Dec. 27, 2001.

The remainder of the Commission's case against Waksal — including charges that Waksal tipped a family member with inside information, and the Commission's request for civil penalties relating to all of the allegations in the amended complaint — will be stayed pending resolution of that criminal proceeding.

Wayne M. Carlin, Regional Director of the Commission's Northeast Regional Office, said: "As a consequence of his illegal insider trading, Sam Waksal now will be barred from serving as an officer or director of a public company. That's good news for investors, who should be able to buy stock in a company without fear that its CEO will fraudulently serve his own interests over the corporation's. Waksal's $800,000 payment also sends a powerful message — that the Commission will not allow corporate executives to profit personally from fraud on investors."

The Commission's investigation is ongoing. The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in the investigation of this matter.

Contact: Barry W. Rashkover
(646) 428-1856

Helene T. Glotzer
(646) 428-1736

See Also:  Litigation Release 18026
Last modified: 3/11/2003