Attorney, Relatives Settle SEC Insider Trading Charges Over Pharma Merger Tip

An attorney and two relatives settled SEC insider trading charges over a merger tip that passed through the family before the deal became public. The attorney did not trade; he passed the tip to the relatives who did.

The SEC found that a pharmaceutical company employee told his spouse, a law firm partner, on August 4, 2025, that his employer had finalized plans to acquire a biopharmaceutical company in an all-cash tender offer to be announced the next day. Minutes after she shared the information with her law firm partner in the course of discussing her personal life, that partner called his brother and advised him to buy the target's stock, then called a cousin about 50 minutes later with the same advice. Both relatives bought shares while still on the phone with him, the SEC found. Minutes after buying, the cousin advised another cousin to buy, and that relative did, according to the SEC.

On August 5, 2025, the acquirer announced the $412 million, $8.60-per-share tender offer, and the target's stock closed at $8.52, up $4.33 or about 103 percent. The brother, the cousin, and the other cousin sold after the announcement, making combined profits of $34,244.86, the SEC found.

The SEC found that the attorney, his brother, and his cousin each violated Exchange Act Sections 10(b) and 14(e) and Rules 10b-5 and 14e-3(a). The attorney tipped the information in breach of a relationship of trust and confidence with his law firm partner; his brother and cousin traded on it; and the cousin also passed it on.

The attorney agreed to a cease-and-desist order under Exchange Act Section 21C and a $34,244.86 civil penalty, matching his tippees' combined profits. His brother agreed to disgorgement of $7,831.25 plus interest and a matching penalty. The cousin agreed to disgorgement of $25,604.65 plus interest and a $26,413.61 penalty.