SEC Slaps Biotech Consultant Mark Ahn with Insider Trading Charges
A Portland, Oregon biotech consultant is facing two counts of insider trading charges, with federal prosecutors and securities regulators claiming the defendant made profitable stock trades using confidential information he learned during his time consulting for Abeona Therapeutics.
The U.S. attorney’s office in Massachusetts and the Securities and Exchange Commission (SEC) have charged Mark Ahn, who also serves as an adjunct professor at the Portland State University, with two counts of securities fraud.
This isn’t the first time Ahn has been in trouble with the intricacies of the law – less than four years ago he was accused by SEC lawyers of misleading investors on the wonders of Galena BioPharma, a company he led as director and CEO at the time.
Those charges alleged that Ahn oversaw the publishing of over 100 glowing articles about Galena all across the web, but these articles didn’t include disclosures that they were commissioned by the company.
Ahn subsequently stepped down from his leadership role at Galena in 2014. Just three years later, the company’s new CEO Mark W. Schwartz also stepped down from his role during a civil and criminal case about the company’s marketing strategy for its opioid fentanyl (Abstral). At the time of Schwartz’s departure from Galena in 2017, the company, including two of its physicians, was under federal investigation about a rebate agreement.
In terms of the recent charges, the government states Ahn gained confidential inside information about Cambridge, Mass.-based biotech Dimension Therapeutics and the companies competing to acquire it.
Ahn was consulting to Abeona Therapeutics, one of the companies seeking to buy Dimension, and participated in weekly meetings with executives from the former company to develop a purchasing strategy. The acquisition project was termed “Project Diamond,” charging documents stated.
While Abeona did not win over Dimension, Ahn still came away with profits following the Dimension deal. Allegedly, Ahn purchased $38,891 worth of Dimension stock in summer 2017, stock which doubled in price following the news of Dimension’s ultimate acquisition from ultra-rare disease pharmaceutical company Ultragenyx for $151 million.
On the morning of the announcement, Dimension’s stock shot up 262%, according to a release from the District of Massachusetts’ U.S. Attorney’s Office. Government lawyers claim Ahn took away up to $50,000 during this time.
According to SEC documents, the new settlement sees Ahn paying a $667,000 penalty. The SEC is also seeking civil penalties against Ahn, but specific details on these penalties remain unspecified. Additionally, the SEC is looking to prohibit Ahn from serving as a director or officer of a publicly traded company in the future.
Ahn faces a prison sentence of up to 25 years, according to the charging statute, in addition to five years of supervised release. The charging statute also provides a fine of $250,000. A federal district court judge will impose any sentences “based upon the U.S. Sentencing Guidelines and other statutory factors,” the Massachusetts’ Department of Justice statement said. The professional and affiliated organization responsible for prosecuting the case include assistant U.S. Attorney Kriss Basil of Lelling’s Securities, Financial & Cyber Fraud Unit.
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