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SEC Sues Two for Insider Trading of Sequenom and Exact Sciences Shares

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – The US Securities and Exchange Commission is suing two individuals alleging they illegally profited from insider trading of Sequenom and Exact Sciences' stock.

In the lawsuit filed on Wednesday with the US District Court for the Southern District of California, the SEC alleges Brett Cohen and his uncle, David Myers, violated antifraud provisions of federal securities laws when they traded shares based on insider information received from a Sequenom patent agent. The complaint identifies the agent only as "A Tipper" and said he has been with Sequenom since 2002.

A Tipper relayed the information to his brother, identified as "B Tipper," who then passed it on to Cohen — B Tipper's fraternity brother — who alerted Myers.

Myers, executive vice president of I.SO Italia, a tanning bed sales company in Cleveland, illegally profited from trading Exact Sciences' shares after receiving information about Sequenom's intent to acquire Exact Sciences in 2009, before the proposed deal had been made public, the SEC alleges. The hostile takeover never went through, as Genzyme stepped in and provided Exact Sciences with a cash infusion of $24.5 million.

The SEC also accuses Myers of illegally profiting from trading Sequenom shares after A Tipper had alerted him about Sequenom's mishandling of data that resulted in the delay of its SEQureDx Down syndrome test before the company had publicly announced it in April 2009.

In total, Myers made $607,640 illegally, according to the SEC. While he and Cohen, the owner of BAC Consulting, a business consulting firm in the Baltimore area, are named as defendants in the suit, A Tipper and B Tipper are not.

Sequenom did not respond to an inquiry in time for the publication of this story and it was unclear if A Tipper was still with the firm. The SEC, however, said that he had breached his fiduciary duty to Sequenom's shareholders by his actions.

The SEC is asking that Cohen and Myers turn over their profits from the alleged illegal trades, with prejudgment interest. It also asked the court to order them to pay civil penalties.

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