Waksal Friends Settle Charges

Two friends of former ImClone Systems Inc. Chief Executive Samuel D. Waksal agreed to pay a combined $2.8 million to settle civil charges of insider trading, the Securities and Exchange Commission said Thursday.

Zvi Fuks and Sabina Ben-Yehuda, who were also arrested in March on criminal charges of insider trading of ImClone stock in December 2001, settled without admitting or denying the civil charges, the SEC said.

The SEC had charged that Waksal passed on to Ben-Yehuda information that ImClone’s cancer treatment drug, Erbitux, would not receive approval from the Food and Drug Administration.

Ben-Yehuda, who had worked at an investment vehicle set up by Waksal to invest in start-up biotechnology companies, then tipped Fuks, chairman of the Department of Radiation Oncology at Memorial Sloan-Kettering Cancer Center, the SEC said.

Before the information became public knowledge, Ben-Yehuda sold more than $73,000 and Fuks sold more than $5 million of ImClone stock, according to the SEC.

The news of the FDA’s rejection of Erbitux, which was announced after the markets closed Dec. 28, 2001, resulted in ImClone’s stock dropping 16% by the close of the next trading day on Dec. 31.

Fuks agreed to pay $2.7 million and Ben-Yehuda agreed to pay $111,594 in avoided losses, civil penalties and interest, the SEC said.

Waksal was sentenced to slightly more than seven years in prison for insider trading.

Lifestyle entrepreneur Martha Stewart and her former broker, Peter E. Bacanovic, were convicted in March 2004 of conspiring to lie about the reasons behind her sale of ImClone shares Dec. 27, 2001. Stewart served five months in prison and five months under house arrest.