The former general counsel of Biogen Idec Inc. settled securities-fraud and insider-trading charges, agreeing to pay more than $3 million related to his sale of company shares on the day the biotech company learned that a patient taking its new multiple sclerosis drug was sick with a deadly infection.
The settlement with the Securities and Exchange Commission relates to the Feb. 18, 2005 sale of 89,700 shares of company stock by the former official, Thomas J. Bucknum, which resulted in a $1.9 million profit for the executive.
Under the agreement, filed in U.S. District Court in Boston, Mr. Bucknum, 59 years old, who resigned from Biogen in 2005, agreed to pay $1.9 million in disgorgement of profits, $102,000 in interest and a $969,000 civil penalty. He neither admitted nor denied wrongdoing under the settlement.
The eventual death of the patient and a report of a second patient suffering from the same disorder prompted Biogen and its partner Elan Corp., to pull the drug, called Tysabri, from the market later that month, sending Biogen's stock plummeting.
Walter G. Ricciardi, the SEC's deputy director of enforcement and administrator of the Boston office, said a key role of a corporation's general counsel is to protect shareholders from fraud. "Yet, on the afternoon of Feb. 18, 2005, Mr. Bucknum chose to dump his stock on unsuspecting shareholders after he heard about tragic developments related to the company's key drug," Mr. Ricciardi said.
Juan Marcelino, an attorney representing Mr. Bucknum, noted that the SEC chose to impose a penalty of one-half the profits of the sale, reflecting that the trade "involved a unique set of circumstances." The SEC complaint said Mr. Bucknum called his broker at 8:45 a.m. to initiate the sale but heard the news about Tysabri at noon that day, Mr. Marcelino noted. "Mr. Bucknum clearly initiated the trade prior to the Tysabri events," he said.
In a prepared statement, Mr. Bucknum said: "I believe it was prudent to end this episode now and put it behind me."
Executives for Biogen Idec said earlier this week that they expect the Food and Drug Administration by the end of March to rule on new labeling for Tysabri that would allow for the drug's return to the market.
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