U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 24005 / December 7, 2017
Securities and Exchange Commission v. Stephen J. Leonard, Case No. 8:17-cv-02926-JSM-AAS (M.D. Fla. filed Dec. 6, 2017)
SEC Charges Florida Man with Insider Trading Based on Drug Trial Information
The Securities and Exchange Commission filed insider trading charges against a Florida man who allegedly bought stock in the biotechnology company where his sibling worked based on confidential drug trial information misappropriated from the sibling.
According to the SEC’s complaint, Stephen J. Leonard, a resident of Palm Harbor, Florida, made $107,000 in illicit profits by trading in the stock of Puma Biotechnology, Inc., a California-based biotechnology company where his sibling worked in a senior position, before Puma announced positive clinical trial results for its cancer drug. As alleged in the complaint, from May 11 through July 18, 2014, Leonard and his sibling had four telephone conversations. During those conversations, the sibling allegedly shared material, nonpublic information about Puma’s drug trial with Leonard, trusting and expecting that he would keep the information confidential. But, after each conversation, Leonard bought Puma stock based on material, non-public information, breaching a duty of trust and confidence to his sibling. Leonard’s final purchases of Puma stock were made on July 22, 2014, just hours before Puma publicly announced the positive results from its drug trial. After the announcement, Puma’s stock price nearly quadrupled.
The SEC’s complaint, filed in the U.S. District Court for the Middle District of Florida, charges Leonard with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Leonard consented to the entry of a final judgment that provides permanent injunctive relief under Section 10(b) and Rule 10b-5 and orders him to pay $107,000 in disgorgement, $11,996.86 in prejudgment interest, and a civil penalty of $107,000, for a total of $225,996.86.
The SEC’s investigation was conducted by Timothy K. Halloran and supervised by Stacy L. Bogert and Antonia Chion, with assistance from Cheryl L. Crumpton.