WASHINGTON -- The Securities and Exchange Commission alleged yesterday that four Connecticut residents illegally traded on inside information about a pending research agreement between Gaithersburg-based MedImmune Inc. and Merck & Co. Inc.
According to the SEC, Robert J. Young of Old Saybrook learned in June 1991 that Merck and MedImmune were considering a joint venture to develop a vaccine for the human immunodeficiency virus, the SEC alleged. Merck, based in Whitehouse Station, N.J., is one of the nation's largest drug manufacturers.
Mr. Young was entrusted with confidential information about the possible collaboration by his younger brother, Dr. James Young, who serves as MedImmune's senior vice president of research and development, the commission said.
Robert Young then broke a promise to keep the information secret by using it to purchase 1,501 MedImmune common shares and to tip off two friends, the SEC said in a complaint filed in a Connecticut federal court.
Merck and MedImmune, a biotechnology company, announced on Oct. 22, 1991, that they would establish the joint venture. The following day, MedImmune's stock price rose to $47 a share from the previous day's closing price of $35.12 a share.
Without admitting or denying guilt, Robert Young agreed to settle the complaint by surrendering $35,841 plus $14,712 in interest and to refrain from further securities laws violations.
Paul Grand, an attorney for Robert Young, said his client didn't realize that his actions might violate federal securities laws, adding that Mr. Young bought MedImmune shares as a long-term investment.
"He [Young] bragged to his friends about his great brother, who was going to find a cure for AIDS," said Mr. Grand.
The SEC also filed charges against William D. Morgan of Wethersfield, who bought 20,700 MedImmune shares at prices ranging from $28.75 to $35.25, and Russell Lozis of East Hampton, both of whom allegedly traded on tips from Robert Young. The SEC said Mr. Lozis also tipped off his wife, Beth Lombardo, who then purchased MedImmune shares.
Mr. Morgan, without admitting or denying guilt, agreed to pay a $137,997 settlement. The SEC said litigation is still pending as to Mr. Lozis and Ms. Lombardo.