(Reuters) - A former executive at pharmaceutical company InterMune Inc and a British restaurant owner were found liable on Monday on U.S. civil charges that they engaged in a $1 million insider trading scheme.
The U.S. Securities and Exchange Commission said a federal jury in San Francisco found Sasan Sabrdaran, InterMune’s former director of drug safety risk management, and Farhang Afsarpour, a British friend, liable for insider trading.
The verdict marked a victory for the SEC, which has gone 2-1/2 years without a trial defeat in federal court after suffering a series of losses in insider trading cases.
“This jury verdict reaffirms our commitment to aggressively root out and prosecute insider trading schemes in order to protect the integrity of our markets,” Andrew Ceresney, the SEC’s enforcement director, said in a statement.
Both defendants denied wrongdoing. Mark Fickes, Sabrdaran’s lawyer, and Christopher Cooke, Afsarpour’s lawyer, said they were disappointed by the verdict.
Fickes said he may appeal after a federal judge determines what penalties should be imposed. He cited “thorny legal issues” in the case, including some that may turn on how the U.S. Supreme Court rules in another insider trading case.
The SEC sued Sabrdaran and Afsarpour in November 2014, two months after Roche Holding AG (ROG.S) said it had agreed to buy Brisbane, California-based InterMune for $8.3 billion.
The SEC said that Sabrdaran in 2010 was part of a group of InterMune employees tasked with shepherding its application before a European Union regulator to market a drug called Esbriet, which aimed at treating a fatal lung disease.
The SEC said Sabrdaran tipped Afsarpour to inside information about the drug’s progress in the regulatory process, allowing him to buy InterMune stock and spread bets. It said he also collected money from friends to trade on their behalf.
In December 2010, InterMune said the European Medicines Agency advisory subcommittee assessing the application had recommended Esbriet for approval, causing InterMune’s stock price to soar, the SEC said.
Afsarpour, who lives in Manchester, England, and owns a number of restaurants, and two of his friends made nearly $1.08 million trading ahead of that announcement, the SEC said.
Sabrdaran denied tipping Afsarpour, who said he had been placing bets on InterMune for several months after analysing its public statements and believing the company was likely to get EU approval for Esbriet.
The case is Securities and Exchange Commission v. Sabrdaran et al, U.S. District Court, Northern District of California, No. 14-cv-4825.
Reporting by Nate Raymond in New York; Editing by Peter Cooney and Dan Grebler