Doctor, Relative Trade on Negative Trial Results
Frequently corporate employees receive confidential information, that is, information that is material and has not been made available to the public. Those employed in the finance department of a company frequently learn about the firm financial results, for example, before they are published and available to the public. The same is frequently true in the pharmaceutical industry. There clinical results are typically learned from on-going tests before the information is released to the public. Once the information is obtained, those in possession are not permitted to trade in the stock until the information is released. Unfortunately for one doctor engaged at a medical consulting firm, failed to comply with the standard rule. In the Matter of Sidney A. Spector, MD, PhD, File No,. 3-20910 (June 27, 2022).
Sidney Spector is a neurologist licensed to practice in Arizona and Florida. He operates a medical consulting firm through a wholly owned entity. In 2019 he was employed as a medical consult at Solid Biosciences Inc. The consultancy focused on a clinical trial for a gene therapy to treat Duchenne muscular dystrophy, then under development by the company.
During his consultancy, Dr. Spector learned that the trial was not successful through his position at Solid Biosciences. Rather than maintain the confidentiality of the information he acted on it. Specifically, Dr. Spector sold his Solid Biosciences shares from his brokerage account. The sale permitted him to avoid a loss of $28,142.33. He also persuaded a close relative to sell his shares, avoiding a loss of $2,351.89, The Order alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b).
To resolve the matter Respondent consented to the entry of a cease-and-desist order based on the Sections cited in the Order. In addition, he will pay disgorgement of $2,142.33, prejudgment interest of $2,381.44 and a penalty of $33,045.02.