According to a lawsuit filed on Tuesday, the Securities and Exchange Commission (SEC) has charged Matthew Panuwat with antifraud violations after he traded on material nonpublic information in advance of Pfizer Inc.’s acquisition of the biopharmaceutical company he worked for Medivation Inc. The Northern District of California complaint asserts that the defendant obtained illicit profits of just over $107,000 by trading on information that he had a duty to refrain from using for his own gain.
The filing explains that Panuwat worked for Medivation, a mid-sized oncology-focused biopharmaceutical firm based in San Francisco, California. The filing describes that in his role with Medivation, Panuwat closely watched the stock prices, drug products, and development pipelines of other biopharmaceutical companies, including rival Incyte Corporation, and monitored merger and acquisition activity in the industry.
In the course of his employment, the defendant reportedly received nonpublic information on Aug. 18, 2016, disclosing that the company was soon to be acquired. According to the SEC, Panuwat acted within minutes by purchasing shares of Incyte. He reportedly did so from his work computer in anticipation that its shares would rise when the Pfizer acquisition news became public.
Six days after Panuwat learned of the impending acquisition, Medivation publicly announced Pfizer’s all-cash tender offer at a price per share significantly above the price at which Medivation shares had been trading. The SEC’s complaint states that over the course of the trading day, Medivation shares rose about 20% while Incyte shares rose 8%.
The filing accuses the defendant of knowing or being reckless in not knowing that information he was entrusted with was material and non-public and trading on it. The SEC states a single claim for relief under Section 10(b) of the Exchange Act and Rule 10b5 thereunder, and requests a permanent injunction, civil penalties, and an officer and director bar.