The Deal Target Got Away; the Trading Executive Did Not
Insider trading has long been a key focus of the Commission’s enforcement program. In recent months interest seems to have shifted to offering fraud cases and those involving microcap securities. Yet Commission’s most recent insider trading cases is classic, almost — a former corporate board member and then consultant who worked on a lost acquisition target charged with insider trading by the Commission and DOJ. SEC v. Ahn, Civil Action No. 1:21-cv-10203 (D. Mass. Filed Feb. 5, 2021).
Mark Ahn, Defendant, was a member of the board of director of Abeona Therapeutics, Inc. In that role he helped the firm identify prospective business opportunities. He was subject to standard confidentiality provision.
In early 2017 Mr. Ahn became a consultant to the firm. His consulting agreement required that all material information he obtained from the firm be maintained as confidential. By May 2017 he was participating in weekly meetings at the firm, discussing business opportunities. One of the opportunities under consideration was publicly traded Dimension Therapeutics, Inc, a Massachusetts based pharmaceutical company.
The next month Mr. Ahn’s firm made an offer. Dimensions was interested. Talks continued. After a second offer Mr. Ahn began purchasing Dimensions stock. The company also entertained other offers. The stock price increased.
On August 17, 2017 Abeona submitted what it called the best and final offer. On August 25, 2017 Dimension announced that it had accepted an offer but not the one of Abeona but of another bidder. The firm’s share price spiked up, rising 162%. Several days later Mr. Ahn sold his shares for a profit of $48,874. The complaint alleges violations of Exchange Act Section 10(b). The case is pending. See Lit. Rel. No. 25024 (Feb. 5, 2021). The U.S. Attorney’s Office for the District of Massachusetts filed parallel criminal charges.