The Securities and Exchange Commission charged TherapeuticsMD Inc., a pharmaceutical company, with violations for sharing of material, nonpublic information with sell-side research analysts without also disclosing the same information to the public. The SEC’s order says that on two separate occasions in 2017, TherapeuticsMD selectively shared material information with analysts about the company’s interactions with the U.S. Food and Drug Administration (FDA). As detailed in the SEC’s order, on June 15, 2017, one day after a publicly-announced meeting with the FDA about a new drug approval, TherapeuticsMD sent private messages to sell-side analysts describing the meeting as “very positive and productive.” TherapeuticsMD’s stock price closed up 19.4 percent on heavy trading volume the next day. At that time, the company had not issued a press release or made any other market-wide disclosure about the meeting. The whistleblower is represented by Edward Scarvalone of Willens & Scarvalone in New York.
“Information about a pharmaceutical company’s interactions with the FDA can be critical to investors. It is essential that when companies disseminate material, nonpublic information, they do so fairly and appropriately to all investors and not just a select few analysts,” said Carolyn M. Welshhans, Associate Director of the SEC’s Division of Enforcement.
TherapeuticsMD consented to the SEC’s order without admitting or denying the findings and was ordered to cease and desist from future violations of Regulation FD and Section 13(a) of the Securities Exchange Act of 1934. The company agreed to pay a $200,000 penalty.