January 27, 2023

SEC settles insider trading charges with former quality control executive

On January 27, 2023, the US Securities and Exchange Commission announced a settlement with Donna Matuizek, who was employed as Vice President of Quality for a supplier of Pandion Therapeutics, Inc. between 2016 and 2022.

According to the Cease and Desist Order issued by the SEC, in the course of her employment Matuizek acquired material non-public information about the anticipated acquisition of Pandion by Merck & Co., Inc.  She purchased Pandion stock on the basis of the non-public information on February 16, 2021, in violation of the duty she owed to her employer “to hold all…confidential or proprietary information [received from third parties with which Supplier does business] in the strictest confidence and not…disclose it [or] use it except as necessary in carrying out [her] work…consistent with [her employer’s] agreement with such third party,” and in violation of the duty she owed not to “use, disclose or share insider information that is not in the public domain for personal gain.”  Merck had been conducting due diligence on Pandion and its business partners for several months before the companies agreed, on February 9, 2021, to move forward with the acquisition of all outstanding Pandion stock for $60 per share.  Matuizek was aware of, and participated in, Merck’s due diligence process, which included an on-site examination of Matuizek’s employer.  She purchased 700 shares of Pandion stock during that process.

Following the company’s public announcement of the acquisition on February 25, 2021, the value of Pandion shares increased by approximately 133%, and resulted in a gain of $27,800 for Matuizek.

As noted in the Cease and Desist Order, Matuizek knew or recklessly failed to know that information about the pre-acquisition due diligence audit was both material and non-public; she likewise knew or had reason to know that the material non-public information she possessed on the date of her stock purchase had been acquired from officers, employees or agents of the acquiring or the target company, and that by trading on the information she would be breaching her duty of trust and confidence to both her employer and Pandion.  The SEC concluded that Matuizek’s conduct violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, as well as Section 14(e) and Rule 14e-3(a) thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities or tender offers.

As a result, Matuizek was ordered to pay disgorgement of her profits, $27,800, a civil money penalty in an equal amount, plus prejudgment interest of $1,7617.96.

Cease and Desist order