Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Tuesday, April 22, 2014

SEC Charges Dr. Loretta Itri with Insider Trading of Gentri

On April 21, 2014, the Securities and Exchange Commission (the “SEC”) charged a former biopharmaceutical company executive and two others with insider trading on confidential information about the company’s key developmental drug.  The company’s stock price fell sharply when it announced clinical trial results for the drug.
Dr. Loretta Itri, president of pharmaceutical development and chief medical officer of Genta, Inc., her longtime friend, Dr. Neil Moskowitz, an emergency room physician, and one of his patients, were named in the insider-trading action.  In a complaint filed in U.S. District Court in New Jersey, the SEC alleged that Itri obtained material nonpublic information about Genta’s clinical trial results for an experimental drug designed to treat advanced melanoma.  In a telephone conversation just one day before the public announcement of the drug trial results, Itri provided Moskowitz with material nonpublic information.  Minutes after that, Moskowitz sold his Genta securities and tipped a friend and patient, Mathew Cashin, concerning the results.  As a result of their trading based on material nonpublic information, Moskowitz and Cashin reaped approximately $139,000 of illegal gains.
“Itri was entrusted with highly confidential information by Genta, but betrayed her duty as an executive allowing a friend to profit,” said Amelia A. Cottrell, associate director of the SEC’s New York Regional Office.  “We will continue to hold company insiders responsible and punish this type of betrayal of trust.”
According to the SEC’s complaint, Itri was directly involved in the drug trials at Genta, and was one of the first to learn of the results prior to the public announcement on October 29, 2009.  Genta’s stock dropped approximately 70 percent on the news, and the SEC alleges that Moskowitz and Cashin obtained illegal gains by selling their Genta stock the day before the announcement.
The SEC’s complaint charges Itri, Moskowitz, and Cashin with violating federal antifraud laws and the SEC’s antifraud rule.  Without admitting or denying the allegations in the complaint, the three defendants agreed to settle the SEC’s charges against them.
The settlement, which is subject to court approval, would enjoin the defendants from further violations of the federal securities laws and require Itri to pay civil penalty of approximately $64,000 and bar her from serving as an officer or director of a public company for five years.  The settlement also requires Moskowitz to return $64,300 of allegedly ill-gotten gains, plus prejudgment interest of $9,556, and pay a civil penalty of $64,300.  The settlement requires Cashin to return $75,140 of allegedly ill-gotten gains, plus prejudgment interest of $10,955, and pay a civil penalty of $37,570, which reflects the cooperation Cashin provided to the SEC’s investigation.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at info@securitieslawyer101.com or  www.securitieslawyer101.com/blog.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.securitieslawyer101.com

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