SEC Charges, Settles with Advanced Cell Technology and Ex-CEO over Failure to Report Insider Stock Sales
Advanced Cell Technology Inc., a Marlborough-based biotechnology company, and its former chief executive agreed to settle charges by the Security and Exchange Commission that the executive defrauded investors by failing to report his sales of company stock, the SEC announced Wednesday.
The company and the former executive, Gary H. Rabin, neither admitted nor denied the SEC’s findings while consenting to orders that charge them with violations of the Securities Act of 1933.
“An SEC investigation found that after Gary H. Rabin became CEO, CFO, and chairman of Advanced Cell Technology (ACT) in 2010, he repeatedly failed to report his sales of company stock for the next few years,” the SEC said in a press release. “Subsequently, ACT’s annual reports and proxy statements during that period were inaccurate because they failed to report that Rabin was not complying with his obligation to disclose his substantial sales of ACT stock.”
In the interest of providing investors with transparency, company officials are required to promptly report their sales and purchases of company stock.
From 2010 to 2012, Rabin made 27 sales of $1.5 million worth of ACT stock, but it wasn’t until May 2013 that he reported those sales, the SEC said.
Rabin, who left the company earlier this year, agreed to settle the SEC’s charges by paying a $175,000 penalty. ACT agreed to pay a $375,000 penalty and retain an independent consultant to conduct a review of its reporting and compliance procedures.
An attorney for Advanced Cell Technology declined to comment on the settlement.
An attempt to reach Rabin’s attorney for comment was not immediately successful.
In a statement, Michele Wein Layne, director of the SEC’s Los Angeles regional office, said: “It’s not merely a technical lapse when executives fail to report their transactions in company stock, because investors are consequently denied important and timely information about how an insider is potentially viewing the company’s future prospects. Instead of reporting his numerous company stock sales within two days as typically required, Rabin waited more than two years and compromised Advanced Cell Technology’s financial reporting obligations.”
Chris Reidy can be reached at reidy@globe.com.
