August 10, 2022

SEC charges scientific advisor and two relatives with insider trading

The Securities and Exchange Commission recently charged Dr. Pablo Rubinstein, a scientific advisor to Ampio Pharmaceuticals, Inc., and two of his relatives – Eduardo Rubinstein and Mark Klein – with insider trading for unlawfully trading in Ampio securities in advance of a negative public announcement involving one of the company’s flagship developmental drugs in 2018.

According to the SEC’s complaint, Pablo served as a member of Ampio’s Scientific Advisory Board and was regularly entrusted with material nonpublic information (MNPI) related to clinical studies for developmental drugs and interactions with the Food and Drug Administration.  The SEC alleges that Pablo was indirectly involved in informal dispute resolution discussions with the FDA regarding its decision to deny Ampio’s request for a Biologics License Application (BLA) for its flagship drug Ampion, effectively preventing the company from marketing and distributing the drug in the US.  Pablo learned on August 3, 2018 that the denial would remain unchanged and, before the information was publicly disclosed, shared this MNPI with his brother Eduardo.  Based on this tip, Eduardo allegedly sold his all of his shares of Ampio securities and then shared the MPNI with his son-in-law, Mark Klein, who also allegedly sold all of his Ampio stock.  Following Ampio’s announcement on August 7, 2018 regarding the denial, Ampio stock dropped by more than 78 percent, and Eduardo and Klein allegedly avoided losses of approximately $225,000 and $206,000, respectively.

On July 28, 2022, the SEC filed a complaint in the US District Court for the Southern District of New York accusing Pablo, Eduardo and Klein with violating the antifraud provisions of the of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933.  Pablo consented to the entry of a final judgment against him without admitting or denying the allegations in the complaint.  In the final judgment, he agreed to be permanently enjoined from further securities violations and agreed to pay a civil penalty of nearly $226,000.  The final judgment was approved by the court on August 1, 2022.  The SEC’s cases against Eduardo and Klein continue.

SEC Press Release | SEC Complaint | Final Judgment – Pablo