By Ann C. Logue
People who commit insider trading know that it is wrong, so they often have others place their trades or open accounts under pseudonyms. The SEC doesn’t care: if you pass on material non-public information in violation of your fiduciary responsibility, you are guilty of insider trading.
This week, the SEC filed charges against Usama Malik, the former CFO of Immunomedics. In April of 2020, clinical trials of the company’s breast cancer drug, Trodelvy, were so good that the FDA halted trials to allow the company to bring the drug to market. A trading black-out was in place that prohibited Immunomedics employees and members of their households from trading in the stock. No matter. Malik allegedly told his live-in romantic partner, Lauren S. Wood, and she went and bought stock.
Over the years, insider trading and related fraud cases have involved roommates, housekeepers, and same-sex partners (in the era before they were allowed to marry). That’s one reason corporate trading prohibitions usually apply to members of the household rather than to relatives. Regulators look at unusual stock and options trades after big corporate announcements. It’s possible that they noticed that Lauren Wood lived at the same address as Usama Malik. In addition, LinkedIn shows a Lauren Wood who used to work at Immunomedics. When FINRA investigators first noticed the trading and questioned Malik, he did not disclose the relationship.
Immunomedics stock doubled after Trodelvy’s results were announced, and Wood allegedly made $67,060. A few months after that, Immunomedics was acquired by Gilead Sciences. And at some point, Malik and Wood broke up.
It will be awkward when they see each other in the courtroom. Defense lawyers specializing in financial fraud make money from insider trading. Does anyone else? I would love to know if any convicted insider traders would admit to trades other than the ones they were charged for making. (The current statute of limitations on insider trading is ten years, up from five.) If anyone wants help writing their story, I’m available.
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