Pharmaceutical executive Loretta Itri, emergency-room physician Neil Moskowitz and his patient Matthew Cashin have agreed to pay more than $325,000 to settle insider trading charges brought by the U.S. Securities and Exchange Commission, the agency said in a press release issued Monday.
Itri is president of pharmaceutical development and chief medical officer of Genta Inc, a publicly traded New Jersey-based biopharmaceutical company that was developing an experimental drug designed to treat advanced melanoma. According to the complaint filed by the SEC in the matter, Itri’s role at the company gave her continuous direct access to material nonpublic information about the drug, Genasense, during Phase 3 of clinical trials.
When Genta released its top-line Phase 3 results on October 29, 2000, they showed that Genasense was ineffective. According to the SEC complaint [PDF], the company’s stock price nosedived 70 percent in the wake of that news, plunging from $0.66 per share at the close of trading on October 28, 2009, to $0.20 per share at the close of trading the next day.
According the SEC, a day before Genta shared the Phase 3 results publicly, Itri telephoned her long-time friend Moskowitz and gave him a heads-up.
“Minutes after his call with Itri, Moskowitz sold his Genta securities,” the SEC complaint reads. “Moskowitz then tipped Cashin and induced three other investors to sell their Genta securities before the negative public announcement.”
Moskowitz and Cashin netted a combined $139,000 by trading on the material nonpublic information provided by Itri, according to the SEC.
“Itri was entrusted with highly confidential information by Genta, but betrayed her duty as an executive allowing a friend to profit,” Amelia Cottrell, associate director of the SEC’s New York Regional Office, said in a statement. “We will continue to hold company insiders responsible and punish this type of betrayal of trust.”
