SEC Files Another Settled Insider Trading Case

by Dorsey & Whitney LLP

Insider trading continues to be a key priority in the new get tough enforcement era. Last week closed with the filing of an insider trading action centered on the BP oil spill in the Gulf of Mexico. This week begins with another insider trading action, this time tied to clinical tests for a possible new advanced melanoma drug.

SEC v. Itri (D.N.J. Filed April 21, 2014) is an action against three defendants: Dr. Loretta M. Itri; Dr. Neil T. Moskowitz; and Mathew Cashin. Dr. Itri was the President of Pharmaceutical Development and Chief Medical Officer of Genta, Inc. from 2003 until the firm filed for bankruptcy in 2012. Dr. Moskowitz is an emergency room physician; and Mr. Cashin was a patient of Dr. Moskowitz in the emergency room.

This case centers on the October 29, 2009 announcing by Genta regarding the Phase 3 clinical trial results for its new drug. In that announcement the firm stated that the Phase 3 trials were disappointing. The share price dropped significantly, from $0.66 to $0.20.

Prior to that time the drug had been in Phase I and II clinical trials. At the beginning of the Phase III trials the company hoped that it would shortly be able to market the drug. During the trials Dr. Itri had continuing access to information regarding the trials. On October 26 and 27, for example, she participated in meetings and conference calls about the drug. On October 28 she received the final independent verified results.

Doctors Itri and Moskowitz had known each other for about 40 years. They talked sporadically. After discussing Genta with Dr. Itri, Nr. Moskowitz purchased shares in the company. Over a period of about one month beginning in mid-September 2009 the physician acquired 142,000 shares.

Dr. Moskowitz also advised others to purchase Genta shares. For example, after treating Mr. Cashin in the emergency room in mid-August 2009 he purchased Genta shares on the next trading day. In subsequent conversations Dr. Moskowitz advised Mr. Cashin that he knew executives at the firm and that it was conducting drug tests, the results of which could be significant. Over a period of a few weeks beginning after the emergency room visit, Mr. Cashin acquired 173,830 shares of Genta for his account and those of several family members. Mr. Cashin also told three friends about the pharmaceutical company. Each purchased a small amount.

On October 28, 2009, the day before the drug trial announcement, at 10:33 there was a telephone call between Drs. Itri and Moskowitz. The call lasted 3 minutes. At 10:29 there was a second call between the two physicians. The call duration was one minute. At 10:33 Dr. Moskowitz placed a sell order for all 22,000 shares of the Genta shares in his retirement account. Thirteen minutes later sold all 120,000 shares of Genta held in his individual account.

Later the same morning Dr. Moskowitz called Mr. Cashin. Less than a minute after the call Mr. Cashin begain selling all of his Genta shares. He also instructed a family member to sell Genta shares. Overall the two sold 173,830 shares. Later that day others Mr. Cashin had recommended acquire the stock sold their shares. The Commission’s complaint alleges violations of Exchange Act Section 10(b) and Securities Act Section 17(a).

Each defendant resolved the charges, consenting to the entry of permanent injunctions precluding future violations of the Sections cited in the complaint. In addition, Dr. Itri is required to pay a civil penalty of approximately $64,000. The order also bars her from serving as an officer or director of a public company for five years. Dr. Moskowitz is required to return $64,300 of ill-gotten gains, pay prejudgment interest and a civil penalty equal to the amount of the repayment. Mr. Cashin will return $75,140 of allegedly ill-gotten gains, pay prejudgment interest on that sum and a civil penalty of $37,570. This resolution acknowledges his cooperation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dorsey & Whitney LLP | Attorney Advertising

Written by:

Dorsey & Whitney LLP

Dorsey & Whitney LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.