Devices & Diagnostics

SEC charges duo with insider trading of medical companies’ stocks

The Securities & Exchange Commission charges Brett Cohen and David Meyers in an alleged insider trading scheme involving shares of Exact Sciences Corp. and Sequenom Inc. that netted more than $600,000. The federal Securities & Exchange Commission charged a Baltimore business consultant and his uncle in Cleveland of an insider trading scheme that netted the […]

The Securities & Exchange Commission charges Brett Cohen and David Meyers in an alleged insider trading scheme involving shares of Exact Sciences Corp. and Sequenom Inc. that netted more than $600,000.

The federal Securities & Exchange Commission charged a Baltimore business consultant and his uncle in Cleveland of an insider trading scheme that netted the pair more than $600,000.

Brett Cohen was allegedly the recipient of coded emails, referencing the white-collar crime film Wall Street, from a member of his fraternity that contained nonpublic information about San Diego-based Sequenom Inc. (NSDQ:SQNM), which Cohen then passed to his uncle, David Myers, according to the SEC. The information reached Cohen’s fraternity brother through that man’s own brother, a patent agent for Sequenom.

The inside information the Sequenom employee leaked included the company’s Jan. 2009 offer to acquire Exact Sciences Corp. (NSDQ:EXAS) and that data released in April 2009 showing the efficacy of its Down syndrome test could no long be relied upon by investors.

In the parallel criminal complaints filed Dec. 8 against Cohen and Myers in the U.S. District Court for Southern California, the SEC alleges that Myers purchased 35,000 shares of Exact Sciences stock before Sequenom announced its takeover plans. The announcement caused a 50 percent increase in the stock price, winning Myers more than $34,000 in illicit profits, according to the SEC complaints. Madison, Wis.-based Exact Sciences, which was flirting with delisting from NASDAQ at the time of the attempted acquisition, eventually thwarted the takeover.

With the nonpublic information on Sequenom’s Down syndrome test, Myers allegedly bought options on the company, betting against its stock. The negative news precipitated a 75 percent drop in the price of SQNM shares, and Myers later sold all of his holdings for illegal profits of more than $570,000, according to the SEC complaint.

The Massachusetts Medical Devices Journal is the online journal of the medical devices industry in the Commonwealth and New England, providing day-to-day coverage of the devices that save lives, the people behind them, and the burgeoning trends and developments within the industry.

This post appears through the MedCity Influencers program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCity Influencers. Click here to find out how.