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Longtime friends nabbed for insider trading

This with a company who had history of lying about Down Syndrome tests

Story updated on August 21.

Two Carlsbad residents, friends since childhood, were slapped this week for insider trading that arose after they attended a concert together. According to the Securities and Exchange Commission, in July of 2016, Robert Lozuk, then a senior vice president of deeply troubled biotech Sequenom, tipped off a friend that Sequenom was about to be purchased.

The stock soared 176 percent, permitting to dump his shares for a quick profit of $26,643. He is now required to disgorge those gains, and has been hit with other penalties. Without admitting or denying the allegations, Lozuk, who had told Sequenom he would make no such disclosures, will pay a $26,643 penalty and agreed to a five-year ban prohibiting him from acting as an officer or director of a public company.

When it was a standalone company, Sequenom was the very picture of frauds often pulled by newly-public companies, particularly biotechs. It went public on February 1, 2000, a month before the tech/biotech crash. The opening price of its stock was $26 and it closed the first day at $79.25. The company had no revenue but, supposedly, lots of promise in gene technology. Sequenom stock zoomed to $138, but by yearend 2002, after the tech bubble had burst, it was selling below $1.

By 2009, the stock had gotten back to $25, propelled by excitement about a possible noninvasive prenatal test for Down symdrome. Suddenly, the company announced that investors should no longer rely on previously announced test data. The securities commission charged that the company’s research chief, Elizabeth Dragon, had lied at least three times when she said the Down syndrome test was almost 100 percent accurate. She pleaded guilty to criminal charges and in 2011 died of natural causes, according to her lawyer.

In both 2010 and 2011, two people connected with the company were charged with insider trading in the stock.

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Comments

Are these not the poster children of innovation?

AlexClarke: I guess you could say that. Best, Don Bauder

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