SEC settles with ex-InterMune controller over tip to friend
(Reuters) - A former executive of InterMune Inc has agreed to pay $616,000 to settle claims by the Securities and Exchange Commission that he illegally tipped a friend in 2010 of the status of a regulatory review for its drug Esbriet.
The SEC said Friday it had reached a settlement with former InterMune controller Bruce Tomlinson, a day after it sued him for telling former business associate Michael Sarkesian that a European regulatory review for the drug was moving faster and better than expected.
Sarkesian went on to buy 400 InterMune call options ahead of the announcement, making $616,000 in profits, the lawsuit said. The SEC said as a result of his tip Tomlinson had violated U.S. securities laws.
The SEC had previously reached a settlement with Sarkesian for insider trading violations in March 2012. He agreed to disgorge $616,000 in profits earned on the trade and pay more than $93,800 in civil penalties.
Charles Walker, a lawyer for Tomlinson at Skadden, Arps, Slate, Meagher & Flom, did not immediately respond to requests for comment Friday.
A spokesman for InterMune declined comment. Tomlinson, 53, left InterMune to become the chief financial officer of PDL BioPharma, Inc. He resigned from that company in November 2012.
The SEC originally filed the case in December 2010, against one or more unknown purchasers of InterMune stock. It amended the complaint in March 2012 to name Sarkesian. The case is in federal court in New York.
The SEC has pursued a number of these types of cases seeking to freeze assets after detecting suspicious trading, such as a lawsuit filed in February over trades in the stock of H.J. Heinz Co.
Scott Friestad, associate director of the SEC's enforcement division, called the cases "some of the most challenging" the agency pursues. While the SEC doesn't win all of them, he said, it has "achieved excellent results overall."
"We feel InterMune is a good example of that," he said.
Suspiciously timed 2010 trades in InterMune are also at the center of an investigation into Steven A. Cohen's SAC Capital Advisors. It was not clear if the cases were related.
The complaint against Tomlinson, filed in U.S. District Court in San Francisco, centers on InterMune's application for European regulatory approval of Esbriet, a drug for idiopathic pulmonary fibrosis.
During the review, InterMune had as late as October 2010 told investors it anticipated a decision by a subcommittee that vets applications for human use of particular drugs in the first half of 2011.
As a result of Tomlinson's involvement in strategic planning at InterMune, the SEC said he became aware the review was going better and quicker than anticipated.
Over two days in November 2010, the SEC said Tomlinson emailed material non-public information to Sarkesian, a Swiss citizen, about the progress of the review and how it would affect InterMune's strategic planning.
In early December 2010, Sarkesian directed a broker-dealer to purchase InterMune call options for Quorne Ltd, a British Virgin Islands limited liability company owned by a Cyprus trust maintained to benefit his wife, the SEC said.
A lawyer for Sarkesian did not respond to a request for comment Friday.
The case is SEC v. Tomlinson, U.S. District Court, Northern District of California, No. 13-2549.
(Reporting by Nate Raymond; Editing by Gary Hill)