Subscribe free to our daily email newsletterInsider Trading Case Involves Rockville Biotech
Nov 3, 2010 19:27 - 0 Comments
Photo from Clinical Care Options
As reported by many news outlets yesterday, including The Washington Post and The New York Times, a French doctor, Yves Benhamou has been charged with insider trading for telling an unamed hedge fund about drug testing setbacks at the Rockville-based Human Genome Sciences.
During the clinical trial of the hepatitis drug, Albuferon, he allegedly phoned, emailed, and texted messages to an unnamed “co-conspirator” who was a portfolio manager at the hedge fund. Although the charging documents do not name the fund, news reports identified FrontPoint Partners, a unit of Morgan Stanley. FrontPoint has admitted Dr. Chip Skowron is on leave during the investigation.
The Securities and Exchange Commission brought civil charges against Dr. Benhamou while the U.S. attorney’s office in Manhattan filed a criminal complaint. The documents claim the hedge fund avoided $30 million in loses based on the information provided. Traders were pushed to dump all of the Human Genome shares on January 22, 2008, right before the company announced it would be stopping parts of the Albuferon trial. One patient in the Albuferon trial died and another developed lung disease, possibly as a side effect of the drug.
As the NYT article explains:
The case demonstrates the conflicts that can develop when an expert in the medical field also advises investors. And it shows the pitfalls that can await a foreigner not familiar with American securities laws.
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