MORRIS PLAINS BOROUGH, NJ (Morris County) – The former head of corporate communications for a Morris County-based biopharmaceutical company Wednesday admitted her role in an insider trading scheme, according to U.S. Attorney Philip R. Sellinger announced.
Lauren S. Wood, 33, of Washington, D.C., pleaded guilty before U.S. District Judge John Michael Vazquez to securities fraud, Sellinger said.
Stemming from the same alleged conduct, Usama Malik, also of Washington, D.C., was previously charged in a three-count indictment with insider trading, securities fraud, and securities fraud conspiracy, Sellinger said
According to documents filed in this case and statements made in court, from 2018 through October 2020, Malik was the chief financial officer (CFO) of a biopharmaceutical company in Morris Plains listed on the NASDAQ Stock Exchange.
On April 6, 2020, the company publicly announced for the first time that its breast cancer drug – an antibody-based drug designed to treat certain breast cancer patients who had very limited treatment options beyond chemotherapy – had proven effective in pre-market clinical trials. In October 2020, another biopharmaceutical company acquired the company for which Malik worked for approximately $21 billion.
Malik was among the first, and one of the few, employees who received the material non-public information about the breast cancer drug before the public announcement. Within minutes of obtaining that information, Malik passed it along to Wood, who lived with Malik at the time and was formerly employed by the same company.
Before April 6, 2020, and within hours of receiving the insider information from Malik, Wood placed an order for approximately 7,000 shares of the company’s stock, despite the fact that during the same time period the company’s stock was downgraded by financial experts. After the company announced that its cancer drug had proven effective in pre-market clinical trials, its stock price increased. After selling her shares, Wood more than doubled her investment, realizing gross profits of $213,618.
The securities fraud charge to which Wood pleaded guilty carries a potential penalty of 20 years in prison and a $5 million fine. Sentencing is scheduled for Nov. 21, Sellinger said.
The U.S. Securities and Exchange Commission (SEC) also filed a civil complaint on Dec. 1, 2021 based on the same conduct, Sellinger said.