On August 8, 2024, the Securities and Exchange Commission announced that it charged Massachusetts residents Steven Targum, Elliot Targum, and Nicholas Rosenberg with insider trading for trading in the securities of Frequency Therapeutics. Inc., a Massachusetts-based biotechnology company, in advance of the company’s announcement regarding a negative clinical drug trial on February 13, 2023. The three defendants agreed to settle with the SEC to resolve the charges and collectively agreed to pay more than $230,000 in disgorgement, prejudgment interest and civil penalties to resolve the claims.
According to the SEC’s complaint, Steven Targum, who was working as a consultant to Frequency and subject to a confidentiality agreement at the time, received an email from senior officers on February 4, 2024 to discuss a disappointing clinical trial for Frequency’s leading drug product. The next business day, Steven Targum allegedly misused the material nonpublic information (“MNPI”) and placed an order to sell all of his Frequency stock, and then tipped his son, Elliot Targum, who sold about half of his Frequency shares within six minutes of ending the call with his father. According to the SEC, Elliot Targum also shared the tip with his close friend Rosenberg who allegedly sold all of the Frequency shares two days later. Frequency’s stock dropped by 80.6 percent following the public announcement on February 13, 2023, and the three defendants avoided total losses of approximately $110,000 – $86,750 for Steven Targum, $8,376 for Elliot Targum, and $15,323 for Rosenberg.
While the SEC charged the three defendants with violating Section 10(b) of the securities Exchange Act of 1934 and Rule 10b-5 thereunder, subject to the court’s approval, they settled with the SEC and consented to the entry of judgment against them without admitting or denying the SEC allegations. In separate agreements, the defendants also agreed to be permanently enjoined from committing further securities violations. The SEC imposed an officer-and-director bar against Steven Targum and a five-year officer-and-director bar against Elliot Targum. Steven Targum was also ordered to pay $86,750 in disgorgement, approximately $8,500 in prejudgment interest, and a $86,750 civil penalty. Elliot Targum was ordered to pay $8,376 in disgorgement, prejudgment interest of more than $800, and a $8,376 civil penalty. Rosenberg was ordered to disgorge $15,323, pay more than $1,500 in prejudgment interest, and pay a $15,323 civil penalty.
SEC Litigation Release | SEC Complaint | Consent Judgment – S.Targum | Consent Judgment – E.Targum | Consent Judgment – N.Rosenberg