USA: In-house attorney charged with insider dealing

The USA's Securities and Exchange Commission has filed charges of insider dealings against Andrew S Marks, formerly senior in house counsel for Vertex Pharmaceuticals, Inc. The commission alleges that Marks received, in the course of his employment, information relating the business.

The Commission alleges that Marks learned, on September 20, 2001, that Vertex planned to announce the suspension of clinical trials of what the market considered one of its promising drugs on September 24. According to the Commission's complaint, on September 21, Marks sold all of his Vertex stock despite having previously acknowledged in writing that the impending release would not be viewed favorably by Wall Street and that he should not sell his Vertex shares. The Commission's complaint alleges that, by selling his holdings prior to the company's public announcement on September 24, Marks avoided a loss of $105,999.

The Commission has examined internal e-mails including one apparently from Marks to the company's CEO in which he is said to have written "I guess that I am troubled about any employee trading prior to that release because it is likely to have an effect on the stock (looks like I can't sell any shares) and, depending on the degree of that effect, could create the perception of insider trading."

Less than twenty four hours later, the Commission alleges, Marks dumped his stock. When the announcement was made, shortly thereafter, the share price fell sharply.

The Complaint alleges that Marks traded in breach of a fiduciary duty to Vertex and its shareholders not to trade in the Company's stock while in possession of material, nonpublic information about the Company. As a result of the conduct described in the Complaint, the Commission has charged Marks with violations of the antifraud provisions of federal securities laws, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933.

The Commission's Complaint seeks injunctive relief, disgorgement, plus prejudgment interest, and civil penalties and seeks an order barring Marks from acting as an officer or director of any publicly-traded company.

The full complaint is at World Money Laundering Report: Resources