Law360 (June 13, 2022, 9:18 p.m. EDT) — An Illinois federal judge issued final judgment Monday in the U.S. Securities and Exchange Commission’s lawsuit against the wife of a pharmaceutical executive, who admitted to participating in an insider trading scheme that allegedly returned more than $280,000.
Denise Grevas, who was sentenced to a year in federal prison in March after pleading guilty to securities fraud in a separate criminal case, will not have to pay a civil penalty but will be barred from various actions that would violate the Securities Exchange Act of 1934, according to the final judgment rendered by U.S. District Judge Elaine E. Bucklo.
The SEC sued Grevas in August, alleging that she had secretly purchased shares of a company that her husband’s company, H. Lundbeck A/S, was planning to acquire after he casually disclosed non-public information to her in a phone call .
The complaint claimed that she purchased 30,800 shares of Alder BioPharmaceuticals Inc. in 2019 before Lundbeck announced its takeover bid for the company. The U.S. Attorney’s Office for the Northern District of Illinois has filed a parallel criminal lawsuit against Grevas.
“Grevas purchased shares of Alder based on material, non-public information about Alder’s tender offer that she misappropriated from her spouse, who was a member of Alder’s due diligence team. Lundbeck for Alder’s takeover bid,” the SEC’s complaint reads.
After Lundbeck announced the nearly $2 billion acquisition deal, Alder’s share price rose 84% from $10.06 to $18.50 per share and Grevas realized realized and unrealized gains of $286,960, according to the SEC complaint.
In July 2019, the complaint says, Lundbeck began taking steps to acquire Alder and began conducting due diligence on the transaction.
Grevas’ husband, identified in the complaint as “Lundbeck Manager 1”, was at the time working for Lundbeck’s North American subsidiary as a senior manager in the human resources department. He resigned in 2020, according to the SEC complaint.
Once acquisition plans began, Grevas’ husband was asked by his supervisor to take on additional due diligence duties, and his supervisor reportedly said on Aug. 19, 2019, that the acquisition was confidential, the company says. complaint.
After the meeting, according to the SEC, Grevas’ husband called her “to complain about the extra work he would have to do as part of Lundbeck’s due diligence and dropped Alder’s name during the conversation.” .
According to the complaint, Grevas’ husband told her to keep information about the acquisition secret.
The SEC says Grevas’ husband “had no reason to believe” that Grevas would trade using the information, and that Grevas knew the information was not public and she could not trade it.
However, according to the complaint, Grevas immediately purchased shares of Alder in five brokerage accounts that were under its control.
On September 16, 2019, Lundbeck announced her acquisition of Alder, and Grevas’ husband called her to tell her the news. During that phone call, Grevas disclosed to her husband that she had been trading Alder stock for the previous weeks, according to the SEC.
“Lundbeck Manager 1 became angry with Grevas, telling him she shouldn’t have traded shares of Alder because he was an insider and knew about the acquisition,” the complaint reads.
Grevas then proceeded to sell its Alder shares and had realized and unrealized gains of $286,960 by the end of the day from Lundbeck’s announcement, according to the complaint.
Grevas pleaded guilty in the criminal complaint, and soon after, she reached a settlement with the SEC that could have exposed her to civil punishment.
Earlier this month, the SEC asked the court to issue a final judgment in the civil case.
“The SEC’s motion asks that the court waive a civil penalty against Ms. Grevas in light of the criminal sentence against her in the parallel criminal case,” the SEC said earlier this month.
The SEC is represented internally by Richard G. Stoltz, Daniel J. Hayes and Anne C. McKinley.
Denise Grevas is represented in the SEC matter by Jacob L. Kahn of Riley Safer Holmes & Cancila LLP.
The cases are Securities and Exchange Commission v Grevas, case number 1:21-cv-04390, and US v Grevas, case number 1:21-cr-00512, both in the United States District Court for the Northern District of Illinois , East Division.
–Edited by Kelly Duncan.
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