WASHINGTON (Reuters) - A former executive for biopharmaceutical company Puma Biotechnology Inc was charged on Thursday by the top U.S. securities regulator and prosecutors with trading on inside information ahead of a company announcement about its breast cancer drug.
Robert Gadimian, former regulatory affairs director for Los Angeles-based Puma, pocketed more than $1.1 million by secretly trading on Puma stock based on non-public information he learned about positive developments in two clinical trials for the company’s drug, Neratinib, the SEC said in a statement.
A U.S. grand jury in Boston on Thursday also indicted Gadimian on felony charges of insider trading, according to court documents.
A lawyer for Gadimian declined to comment. Gadimian could not be reached by phone and did not immediately reply to an email requesting comment.
Gadimian, through his role at Puma, was privy to non-public information about Neratinib, a breast cancer treatment drug, the SEC said in a complaint. Gadimian learned about drug trials involving Neratinib, including that it performed well and reached “key milestones that would soon be made public,” the SEC said.
Neratinib, as a result, was likely to be a lucrative drug for Puma, the SEC said.
Gadimian bought Puma securities before results from the first Neratinib drug trial were announced in December 2013 and again before the results of a second trial were announced in July 2014, the SEC said.
Through a series of secret trades, without company permission and during periods in which employees were not allowed to trade, Gadimian made about $1,161,000 in profits, the SEC said.
Puma launched an internal investigation after learning of some of Gadimian’s trading through an inquiry by the retail brokerage industry-funded watchdog, the Financial Industry Regulatory Authority (FINRA), the SEC said.
Gadimian, of Burbank, California, traded the securities through an account at Boston-based Fidelity Brokerage Services, LLC, according to court documents.
Gadimian admitted to Puma that he traded in the securities during the periods and that he traded because of “greed,” the SEC said. Gadimian also deleted certain Puma trades from his trading records before giving them to the company’s investigators, the SEC said.
Puma fired Gadimian in 2014, the SEC said.
A spokesperson for Puma, which is not alleged to have engaged in wrongdoing, could not be reached for comment.
Reporting by Suzanne Barlyn and Timothy Ahmann; Editing by Eric Beech and Alistair Bell