Longtime Kadmon consultant slapped with insider trading charges related to $1.9B Sanofi buyout
Months after Sanofi snapped up Kadmon for $1.9 billion, a longtime Kadmon consultant has been accused of using insider knowledge of the buyout to make more than $400,000 in illegal profits.
The SEC filed a complaint against Frank Glassner in a Manhattan federal court on Tuesday, charging him with insider trading. The 68-year-old was also slapped with two securities fraud charges from the Department of Justice, which carry maximum prison sentences of 20 and 25 years, respectively.
Glassner was arrested on Tuesday morning in Novato, CA, where he lives and runs a consulting firm.
In a complaint filed that day, the SEC accused Glassner of reactivating a dormant brokerage account within 30 minutes of learning confidential information about the Sanofi buyout back in late July. The very next day, he allegedly began purchasing Kadmon stock — all while working on acquisition-related executive compensation analyses for Kadmon.
By the time Kadmon and Sanofi announced the buyout deal on Sept. 8, Glassner held 28,445 shares and 910 call option contracts. That day, his stock value surged 71%, reaping $405,000 in illicit profits, the SEC claimed.
“This type of illicit action makes markets unfair and creates an atmosphere of distrust. Our work investigating insider trading hopefully restores faith for investors who need to believe in the process,” FBI assistant director-in-charge Michael Driscoll said in a news release from the DOJ.
Sanofi closed its buyout in November, picking up Kadmon’s newly approved Rezurock for chronic graft-versus-host disease. Months later, CEO Paul Hudson revealed plans to shutter Kadmon’s New York plant and lay off 25 employees.
Glassner’s case is the latest in a slew of recent insider trading suits, including last September when a former Mylan IT executive pleaded guilty to an insider trading scheme ahead of public announcements regarding FDA approvals, revenue reports and its merger with the Pfizer generics subsidiary Upjohn.
The actions landed Dayakar Mallu more than $8 million in unrealized profits and losses avoided, resulting in net profits and losses avoided of more than $4.2 million, the DOJ reported.
That same month, the SEC accused ex-Goldman Sachs analyst Jose Luis Casero Sanchez of making at least 45 illicit trades related to the mergers of AMAG Pharmaceuticals, Viela Bio, Roivant Sciences and others.
Back in August, the SEC charged former Medivation exec Matthew Panuwat with insider trading before Pfizer’s buyout deal went public. Within minutes of learning the confidential news, Panuwat allegedly bought stock options in another mid-cap cancer drug developer, Incyte, whose value he thought would explode once the Medivation acquisition went public.
Sure enough, Panuwat’s Incyte stock options roughly doubled, earning him more than $100,000 in profits, according to the SEC’s complaint.
More recently, former Immunomedics CFO Usama Malik was indicted on three counts of insider trading, securities fraud and securities fraud conspiracy, after allegedly sharing insider information about a Phase III study for Trodelvy with his then-girlfriend and a number of relatives.
And just last month, a Five Prime trial investigator also pleaded guilty to securities fraud, after he was accused of buying more than 8,700 shares just a few hours before the company released positive Phase II trial results.