According to the US Department of Justice, Usama Malik (former chief financial officer of an unnamed company) and Lauren Wood (former head of corporate communications head of an also unspecified company) were part of an alleged insider scheme.
The court documents state that from 2018 to October 2020, Malik served as CFO of a NASDAQ-listed biopharmaceutical firm. On April 6, 2020, that company (referred to as “Company-1” in DOJ documents) publicly announced that its antibody-based drug designed to treat breast cancer patients with limited options outside of chemotherapy had shown promise in clinical trials; in October 2020, another company (“Biopharmaceutical Company-2") acquired Company-1 for approximately $21b USD.
Because Malik was Company-1’s CFO at the time, he allegedly was one of the few and first employees who received non-public information about the breast cancer candidate ahead of the April 6 announcements. Malik allegedly passed the information along to Wood, allegedly living with (and allegedly romantically involved with) at the time; he also supposedly shared the non-public information with relatives.
Then, reportedly within hours of receiving the insider information, Wood placed an order for about 7,000 shares of Company-1 stock, despite the fact that the company’s stock had recently been downgraded by financial experts. After the public announcement, Company-1’s stock price increased, Wood reportedly sold her shares (doubling her investment, with gross profit of more than $213,000 USD) and returned $65,000 USD to Malik.
If found guilty, the securities fraud count carries a potential penalty of 20 years in prison and a $5m USD fine. The US Securities and Exchange Commission (SEC) also filed a civil complaint today based on the same conduct.
Acting US Attorney Rachael Honig credited special agents of the US Federal Bureau of Investigation (FBI), under the direction of Special Agent in Charge George Crouch in Newark, New Jersey, with the investigation leading to the charges. She also thanked the SEC Enforcement Division, under the leadership of Director Gurbir Grewal, and the FBI, in the District of Columbia and the Eastern District of Virginia, for their assistance.
The government is represented by Assistant U.S. Attorney Joshua Haber of the Health Care Fraud Unit and Deputy Chief of the Criminal Division Osmar Benvenuto.
While Malik’s company affiliation at the time the alleged infraction occurred was not revealed in DOJ documents, the Wall Street Journal reports he was serving as chief financial officer of New Jersey-based Immunomedics at that point, and Wood had been with the company but left months earlier. Additionally, the publication reports Malik recently had been serving as chief executive of Fore Biotherapeutics but was fired last week after the announcement of the charges.