SEC v. Lawrence J. Robbins, (S.D.N.Y.). On September 23, 2013, the SEC announced insider trading charges against independent filmmaker Lawrence Robbins. According to the SEC, Robbins traded in Millennium Pharmaceuticals Inc. and Sepracor Inc. securities based on inside information that he got from his business partner John Michael Bennett before the acquisition announcements by the two companies. Bennett got the inside information from his friend Scott Allen. The SEC previously charged Bennett and Allen. According to the SEC, Allen got inside information before the two acquisitions through his job at a consulting firm that was advising the acquiring company in each deal. The SEC alleges that Allen told Bennett about the Millennium and Sepracor deals. Allen first got non-public information about the Millennium transaction in mid-February 2008 when his firm started advising Japan-based Takeda Pharmaceutical Company during its negotiations with Millennium. He then tipped Bennett with inside information about Takeda’s cash tender offer, and Bennett then tipped Robbins. Robbins and Bennett spent tens of thousands of dollars buying Millennium call options. Also, Robbins bought Millennium shares and sold Millennium put options. After the deal was publicly announced, the price of Millennium soared and Robbins started selling his holdings, making more than $1.12 million. Bennett made more than $602,000.
The SEC also alleges that Allen did some due diligence work for the Japanese firm Dainippon Sumitomo Pharma Co. Ltd. (DSP) in connection with its acquisition of Sepracor. Allen tipped Bennett with inside information about the transaction, and Bennett again shared the information with Robbins. In the months leading up to the public announcement that DSP had agreed to acquire Sepracor, Robbins and Bennett bought hundreds of thousands of dollar’s worth of call options in Sepracor. They also sold tens of thousands of dollars of Sepracor put options, and Robbins bought Sepracor shares. Following the public announcement, Sepracor’s stock price rose and both Robbins and Bennett sold their entire positions, making more than $388,000 and $516,000 respectively.
The SEC charged Robbins with violations of Section 10(b) of the Exchange Act and Rule 10b-5, and Section 14(e) of the Exchange Act and Rule 14e-3. Robbins has agreed to pay $865,000 in disgorgement and prejudgment interest and a $150,000 penalty. Without admitting or denying the allegations, Robbins also agreed to be permanently enjoined from future violations of these provisions of the federal securities laws. The SEC’s case continues against Allen and Bennett, who have now pled guilty in parallel criminal actions filed by the U.S. Attorney’s Office for the Southern District of New York.