SEC Brings Insider Trading Case Against Former Biotech CEO

SEC Charges Former CEO of Biotech Company CytoDyn with Fraud, Insider Trading

The Securities and Exchange Commission today charged Nader Pourhassan, the former CEO of CytoDyn Inc., with fraud and insider trading in connection with providing misleading information to shareholders about the progress of a clinical research treatment for COVID-19 and HIV.

According to the SEC’s complaint, Pourhassan repeatedly issued press releases exaggerating CytoDyn’s progress with regard to leronlimab, an antibody that was administered to patients in clinical trials to treat various diseases. The complaint alleges that, in an April 2020 press release, CytoDyn falsely announced that the company had submitted a completed Biologics License Application to the U.S. Food and Drug Administration—a key milestone that caused the company’s stock price to increase. As set forth in the complaint, the FDA submission was woefully inadequate, and the FDA alerted the company of those deficiencies within days; however, Pourhassan did not alert shareholders to this information. In the meantime, Pourhassan allegedly sold approximately $15.8 million worth of CytoDyn stock based on the false information, netting profits of more than $4.7 million.

"I quit before you take my phone out of my hands"

Peikin said the government's focus on personal devices is "the most significant change in the way government and internal investigations are going to be done at least in my memory." He said that if the SEC staff thinks every company in every case is going image every employee's device, then "every investigation is going to take 10 years." Peikin added that "I have had people -- seemingly responsible adults -- have violent reactions to the idea, like 'you're not imaging my phone, I quit before you take my phone out of my hands.'"

SEC Charges Financial Services Professional and Associate in $47 Million Front-Running Scheme

On December 14, 2022, the Securities and Exchange Commission announced fraud charges against Lawrence Billimek, an employee of a major asset management firm with securities portfolios worth billions of dollars, and Alan Williams, who previously worked at several financial industry firms, for perpetrating a multi-year front-running scheme that generated at least $47 million in illegal trading profits.

The SEC’s complaint, filed in federal district court in Manhattan, alleges that, since at least September 2016, Billimek would inform Williams of the asset management firm’s market-moving trades prior to their execution. As the complaint alleges, on the same day, Williams would trade in the same securities prior to Billimek’s employer or while multiple large orders were being placed by the employer. Williams would close his positions after the price of the security moved as expected. This alleged front-running scheme resulted in proceeds of more than $47 million. The SEC staff analyzed trading using the Consolidated Audit Trail (CAT) database to uncover William’s allegedly fraudulent trading and to identify how he profited by repeatedly front-running large trades by Billimek’s employer.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Billimek and Williams.

SEC Whistleblower Program Improved With More Work Ahead, IG SaysThe Securities and Exchange Commission’s whistleblower program still faces steep backlogs as the amount of tips explode, but it has improved at its basic task of making sure helpful tipsters get the money they deserve, an Inspector General’s audit concluded.

The report released Tuesday noted that tipsters still wait, on average, more than a year to get a final determination of awards and amounts even after their information has been used to bring fines, convictions and settlements against offending companies. That compares with an average wait of nearly four years before late 2019, the report said.

Those delays are on top of the staff’s lengthy investigations, which records show can last up to a decade.

Bankman-Fried Said to Be in Talks With Prosecutors Over Bail Deal

Sam Bankman-Fried’s legal team is discussing a deal with federal prosecutors that could allow the disgraced cryptocurrency mogul to be released on bail when he is extradited to the United States, according to three people with knowledge of the matter.

The terms of the deal remain fluid, the people said, and any agreement would require approval from the federal judge overseeing Mr. Bankman-Fried’s case. But under the terms that have been discussed, the founder of the collapsed cryptocurrency exchange FTX could be granted bail with highly restrictive conditions, including home detention, two of the people said. One person said that electronic monitoring was also under discussion. It wasn’t clear what other measures might be required.

Senator Warren Questions Tesla Board Chairman on Conflicts of Interest with Elon Musk’s Takeover of Twitter

United States Senator Elizabeth Warren (D-Mass.) sent a letter to Tesla Board Chairman Robyn Denholm raising concerns that its Board of Directors has failed to meet its legal responsibility to protect Tesla and uphold its fiduciary duty to shareholders from actions by Tesla Chief Executive Officer Elon Musk in the aftermath of his purchase of Twitter.

“Your legal responsibility is to serve as a prudent fiduciary for shareholders and to oversee the management of [Tesla’s] business. That responsibility includes ensuring that Mr. Musk is an effective CEO and that he fulfills his legal obligation to act in the best interests of Tesla and all of its shareholders, not just himself,” wrote Senator Warren “The fact that Mr. Musk was, until recently, the world’s richest man does not absolve him of those legal responsibilities or provide assurances that he will meet them.”

Next Financial Crisis Will Be From Crypto if It’s Not Banned: Indian Central Bank Governor

India’s central bank Governor Shaktikanta Das has predicted that the next financial crisis will come from “private cryptocurrencies” if they are allowed to be regulated and not banned outright. Das was speaking at the Business Standard BFSI Insight Summit on Wednesday.

“Our view is that it should be prohibited because if you try to regulate it and allow it to grow, please mark my words the next financial crisis will come from private cryptocurrencies,” Das said. “They have no underlying value. They have huge inherent risks for our macro economic and financial stability. I am yet to hear any credible argument about what public good or what public purpose it serves.”

The term “private cryptocurrencies” is being used to make the distinction between a public cryptocurrency like India’s CBDC and cryptocurrencies such as bitcoin and ether, which are issued by private players, people familiar with the central bank’s functioning told CoinDesk.