A managing partner of a United Kingdom-based bioscience investment firm is facing a securities clawback action by an investor in the biopharmaceutical company CymaBay Therapeutics who claims his insider status prevents him from holding on to $400,000 worth of short-swing profits.
Abingworth managing partner Kurt von Emster, who is based in California, is alleged by the investor to have been an insider at CymaBay for the purpose of security law. Because of his position helping to manage Abingworth’s CymaBay investments while serving as a director and fiduciary at the company, the plaintiffs claim he is liable under the security law.
According to the complaint, von Emster oversaw transactions of CymaBay securities within a six-month period, resulting in a short-swing profit of approximately $448,000. Yet the plaintiffs claim von Emster has personally disgorged only $692 to the company to date.
Von Emster was statutorily prohibited from exploiting his fiduciary position to realize short-swing trading profits, the complaint contends, either for his own benefit, or for the benefit of the funds he oversaw at Abingworth. While serving as a so-called independent director at CymaBay, von Emster directed Abingworth to purchase as much as $4.5 million worth of stock in CymaBay in July 2015.
Between October 2017 and February 2018, von Emster reported to the Securities and Exchange Commission that Abingworth had executed a number of securities transactions that, according to the plaintiffs, represented short-swing selling. Yet Section 16(b) of the Securities and Exchange Act “strictly prohibits the realization of profits from purchases and sales within six-month periods, irrespective of the insider’s intent, and including for violations that are ‘pre-planned,’” the complaint states.
“Nonetheless, Abingworth’s adoption of an insider trading plan evidences Abingworth’s acknowledgment of the ‘insider’ access and privileged trading position enjoyed by Abingworth … for purposes of the insider trading restrictions imposed” by the Exchange Act, the complaint contends.
The plaintiff, Aaron Rubenstein of Rhode Island, is represented by attorney Miriam Tauber. She did not immediately respond to a request for comment.
A request for comment on the matter from a representative at Abingworth was likewise not immediately returned.