UPDATE 2-US SEC freezes assets in insider trading case

Fri Jan 21, 2011 4:57pm EST

* SEC freezes assets in insider trading biotech case

* Manager at Seattle Genetics gave tip to a relative -SEC

* Tip centered on confidential positive drug trial results

* Insider trading led to $800,000 in illegal profit -SEC (Adds comments from attorney for Zizhong Fan)

By Sarah N. Lynch

WASHINGTON, Jan 21 (Reuters) - U.S. securities regulators said they froze bank accounts containing more than $800,000 in illegal profits after a manager at Seattle Genetics (SGEN.O) gave a relative confidential information about drug trial results.

The Securities and Exchange Commission complaint, which was filed Jan. 19 and unsealed on Friday, says that Seattle Genetics Manager Zizhong (James) Fan told Zishen (Brandon) Fan about positive trial results in the development of a drug used to treat Hodgkin's lymphoma.

The SEC said Zishen spent hundreds of thousands of dollars buying speculative stock options and common stock in the company. Seattle Genetics stock rose 18 percent when the news about the drug trial was made public in late September, the SEC said.

The SEC said it contacted the men on Jan. 13. Shortly afterward, it said Zishen tried to wire several hundred thousand dollars to a bank in China. Zizhong told Seattle Genetics he had to leave for a trip to China, the SEC said. The SEC did not say if he left the United States, and did not specify their family relationship.

Zizhong denied being related to or knowing Zishen, and Zishen denied knowing anyone at Seattle Genetics, the SEC said.

The SEC filed its complaint against both defendants in the U.S. District Court for the Western District of Washington and got an order from a judge freezing the bank and brokerage accounts that held the profits.

Adam Braun, an attorney for Zizhong Fan, said on Friday "the facts are more complicated than they appear."

"We look forward to presenting our side of the case shortly." Braun declined to discuss the nature of the relationship between his client and Zishen, or his client's whereabouts.

A call to an attorney for Zishen Fan was not returned on Friday. (Reporting by Sarah N. Lynch. Additional reporting by Rachelle Younglai; Editing by Robert MacMillan and Tim Dobbyn)