Former Galena chief Mark Ahn back in hot water as DOJ levels insider trading charges for consultant work
When Mark Ahn departed troubled Galena Pharmaceuticals back in 2014, he told investors he looking to pursue other “long-held” goals. Turns out one of those goals may allegedly have been peddling stock based on insider info.
The DOJ on Monday charged Ahn, Galena’s former CEO, with two counts of securities fraud after he allegedly bought a biotech’s stock based on nonpublic information about the company’s intent to sell, which he acquired as a consultant.
Ahn also faces a civil investigation from the SEC on claims he profited on insider knowledge of Cambridge, Massachusetts-based Dimension Therapeutics’ behind-the-scenes work to sell back in 2017. Dimension was successful in that attempt, selling to California ultra-rare disease drugmaker Ultragenyx for $151 million in October of that year.
At the time, Ahn worked as a consultant for New York’s Abeona Pharmaceuticals, which was piecing together a buyout offer for Dimension their team dubbed “Project Diamond,” according to charging documents. Ahn was allegedly made aware by Abeona’s CEO that Dimension was interested in selling and begin buying shares of the biotech in mid-2017
Once Dimension announced it would sell in August, the biotech’s stock skyrocketed 262% in a single day, netting Ahn a major return on the roughly 28,000 shares he had purchased, the feds allege.
Ahn will face up to 25 years in prison and five years of supervised release along with a $250,000 fine, the DOJ said.
Ahn’s name will ring a bell with those who followed the Galena debacle back in 2014, when the SEC launched an investigation over an illegal promotional scheme that eventually led to Ahn’s jettison from the company. Galena allegedly hired an investor relations firm to draft and post essays online that purported to be objective analyses of the company’s securities but was actually paid for by Galena. The drugmaker then failed to disclose that financial arrangement, putting it in the SEC’s crosshairs.
Ahn stepped down in late 2014, citing the need to pursue other opportunities, and was stripped of his severance pay on the way out the door. Ahn was among a group of company insiders who sold stock during the promotional scheme and was being watched by Galena’s board amid the SEC investigation.