The Securities and Exchange Commission today charged Zvi Fuks and Sabina Ben-Yehuda, two friends of the former CEO of ImClone Systems Inc., Samuel Waksal, with insider trading in ImClone securities in December 2001. The Commission charged that Ben-Yehuda and Fuks sold ImClone stock after receiving an illegal tip from Waksal just before the FDA denied approval of ImClone's cancer treatment drug.
Fuks is the Chairman of the Department of Radiation Oncology at Memorial Sloan Kettering Hospital in New York, and in December 2001 was a member of the ImClone Scientific Advisory Board. In December 2001, Ben-Yehuda, a friend of both Fuks and Waksal, worked at Scientia, an investment vehicle set up by Waksal to invest in start up bio-tech companies.
In its complaint, the Commission alleges that, on the evening of December 26, 2001, Waksal learned privately and in advance of any official notice or public announcement, that the FDA would reject ImClone's application for
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Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, said: "This is yet another unfortunate instance of those with access to confidential information using it for their own advantage over the interests of other shareholders without the same access to ImClone's CEO."
The Commission previously settled a separate insider trading case against Waksal for conduct surrounding the same events. Waksal consented to the entry of an order (1) holding him jointly and severally liable with his father, Jack Waksal, for disgorgement of $1,947,804, representing Jack Waksal and Patti Waksal's losses avoided, plus prejudgment interest; (2) requiring Waksal to pay a civil money penalty in the amount of $3,017,464; (3) ordering him to pay disgorgement and prejudgment interest of $804,367, representing his daughter Aliza Waksal's losses avoided; (4) permanently enjoining Waksal from future violations of the provisions of the federal securities laws that the Commission charged him with violating; and (5) permanently barring him from acting as an officer or director of any public company.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter.
Additional Materials: Litigation Release