Boston NIRI board member resigns after insider trading settlement

Jan 12, 2010

Indevus' Brooke Wagner allegedly sold and shorted his stock ahead of bad news

Boston NIRI chapter board member Brooke Wagner, former vice president of corporate communications at Indevus Pharmaceuticals, submitted his resignation to the Boston board and to NIRI after agreeing to a settlement with the SEC for insider trading. NIRI president and CEO Jeff Morgan spoke with Wagner this morning and accepted his resignation, according to NIRI's IR weekly newsletter (membership required).

The SEC settled charges that Wagner sold shares of Indevus stock upon learning of a delay in FDA approval for a drug under review. The SEC says Wagner learned of the delay on May 30, 2008, entered an order to sell all of his Indevus holdings and executed short sales of Indevus stock later that day and on June 2. On June 4 Indevus announced the FDA delay and Indevus stock fell $2.84 per share from the prior day's closing price of $4.10 per share to $1.26 per share, a decline of 69%.

Wagner agreed to settle without admitting or denying the allegations by consenting to a permanent injunction against future insider trading violations and by paying disgorgement and fines totaling $133,000, according to the SEC press release.

Morgan writes in the newsletter that he spoke with Wagner today about the settlement and that Wagner 'recognized his violation of the NIRI Code of Ethics.' Morgan went on to say that the incident 'provides a good reminder that as a condition of membership, every NIRI member agrees to this stringent Code which is grounded in the highest standards of integrity and ethical behavior – our profession demands no less. NIRI has due process for ethics-related matters that involves the NIRI Ethics Council and the NIRI Board of Directors. NIRI tolerates no deviations from our Ethics Code, and although we have had very few membership terminations resulting from ethics violations, NIRI will not hesitate to take this action if warranted.'

By Brad Allen
(Note: Allen, writing here as a freelance journalist, is also chair of NIRI's ethics council)