December 7, 2021

SEC announces insider trading charges against pharma CFO

On December 2, 2021, the Securities and Exchange Commission charged DC residents Usama Malik, the former Chief Financial Officer of a biopharmaceutical company, Immunomedics, Inc.,  and his former girlfriend, Lauren Wood, with insider trading. 

According to the SEC complaint, Malik learned that Immunomedics was planning to announce on April 6, 2020 that its breast cancer drug was determined to be effective, and further clinical testing was not necessary.  Within hours of learning this material nonpublic information (MNPI), Malik allegedly tipped Wood, who was living with him at the time.  Based on this MNPI, Wood purchased Immunomedics stock even though Malik was subject to a trading black-out that prohibited him and any person in his household from purchasing Immunomedics stock.  When the company announced the results of the drug trial, its stock price almost doubled, enabling Wood to realize $67,060 in unlawful profits.  Malik also tipped three of his relatives prior to the Immunomedics announcement, and his relatives collectively obtained approximately $21,400 in illegal gains.  

The SEC also alleged that when Malik was questioned by the Financial Industry Regulatory Authority in July 2020 regarding his relationship with Wood, he answered dishonestly identifying her as “a former colleague” with whom he had not corresponded during the relevant period.  Malik also allegedly indicated that he had “no knowledge” of how Wood could have learned about Immunomedics’ company business activities during that period. 

The SEC filed its complaint in the US District Court for the District of New Jersey, charging Malik and Wood with violating the antifraud provisions in Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder.  The SEC requested that Malik and Wood be permanently enjoined from further violations of the Exchange Act and ordered to pay civil monetary penalties.  The SEC also asked that the court bar Malik from acting as an officer or director. 

On the same day, the US Attorney’s Office for the District of New Jersey announced the filing of charges against Malik and Wood in a parallel criminal case.

SEC Press Release | SEC Complaint | USAO of NJ News Release