Bob McPhail 4:30 p.m., Sept. 16
Two Plead Guilty to Insider Trading in Sequenom
Brent Cohen, a Baltimore business consultant, and his uncle, David V. Myers of Cleveland, pleaded guilty today to criminal charges of insider trading in the stock of scandal-plagued San Diego biotech Sequenom. The two face as long as five years in prison. Separately, the two were charged with civil fraud by the Securities and Exchange Commission. Through highly secretive signals, the two were being tipped of material nonpublic information at Sequenom by a patent agent for the company. After receiving at least a dozen coded phone calls, Myers purchased 35,000 shares in Exact Sciences Corp., which Sequenom was acquiring in January of 2009, according to the SEC. He made more than $34,000 trading on inside information, according to the SEC.
The most egregious offense concerned a scandal that has hurt Sequenom. On April 29 of 2009, Myers learned through the agent that Sequenom would be announcing that investors could no longer rely on previously disclosed data related to a Down syndrome test. Myers bought put options (bets that the stock would go down) just before the closing April 29. The stock plunged by more than 75% on the announcement. Myers cashed in his position the next morning for a profit of $570,000, according to the SEC. Eventually, the former senior vice president for research and development at Sequenom admitted in a criminal case that she knew that so called "blind" tests of the genetic Down syndrome test had been falsified.
The name of the patent agent has not been released. The SEC says the investigation is continuing.