Two Stockbrokers, Biotech Employee Face Insider Trading Charges Related to Pharmaceutical Trials and A Merger

The U.S. Securities and Exchange Commission is charging three men with insider trading in the stock and options of Ardea Biosciences Inc. Those charged included the company’s senior director of information technology Michael J. Fefferman, his brother in-law Chad E. Wiegand, and Akis C. Eracleous. Wiegand and Eracleous are stockbrokers.

According to the regulator, Fefferman had knowledge of material nonpublic data and tipped Wiegand prior to public announcements about two pharmaceutical trials, the acquisition of Ardea Biosciences by AstraZeneca PLC, and a licensing agreement for a cancer drug.

The Commission said that the insider trading happened from 4/09 to 4/12. SEC Philadelphia Regional Office Director Sharon B. Binger said that Fefferman breached his duty to his company’s shareholders when he shared confidential information about the important corporate events before the news was made public. She accused Eracleous and Wiegand of taking unfair advantage of the investing public by using this information to trade before others had access to the same knowledge.

Wiegand purportedly used the tip to buy stock in Ardea using different customer accounts. He then allegedly tipped Eracleous so he could do the same. The alleged insider trading generated about $530K in profits.

The three men have agreed to settle with the SEC. They will likely be subject to disgorgement, prejudgment interest, plus penalties. Also, a cousin of Eracleous is a relief defendant. The cousin consented to pay back over $219 million in illicit profits, disgorgement, plus interest after Eracleous allegedly used his account to make the illegal trades.

The U.S. Attorney’s Office for the Southern District of California has filed criminal charges against Eracleous and Wiegand. They have agreed to be barred from the securities industry.

Contact our stockbroker fraud law firm if you suspect your investor losses are due to fraud.

SEC Charges Biotech Employee, Two Stockbrokers With Insider Trading on Nonpublic Information About Pharmaceutical Trials and Merger, SEC, June 9, 2015

Read the SEC Complaint (PDF)