SEC Files Civil Complaint Vs. Ex-CEO Selden

By Greg Levine
Forbes
September 02, 2005

There are good doctors and mediocre doctors. But according to the U.S. SEC, Dr. Richard Selden is in a class by himself. Selden, the former chief executive of Transkaryotic Therapies (TKT), was charged by the SEC with allegedly hoodwinking investors about failed drug trials to artificially inflate the stock price--then selling off his own shares. According to the civil complaint filed Thursday by the SEC, Selden sent positive press releases even after the U.S. Food and Drug Administration had said in 2001 that trials of TKT's company's flagship drug Replagal, had failed.

By selling his shares before disclosing the negative data about Replagal, Selden "unjustly enriched" himself by $1.66 million, the SEC alleged in the complaint filed in U.S. District Court in Boston. The agency is seeking that money along with the $1.1 million in salary and bonuses Selden earned in 2001 and 2002. According to an Associated Press report, Selden in 2001 sold 90,000 shares of TKT stock--well before Oct. 3, 2002, when TKT finally disclosed the problems with its FDA application. The next day, its shares plunged 61%, to $12.75.

Through his attorney Thomas J. Dougherty, Selden maintained TKT lawyers, who advised him wrongly, bore responsibility for his actions. "He deserves and expects to prevail at any trial of the issues," Dougherty told The Boston Globe.

Whatever the case, TKT has since transformed itself in several ways. Michael Astrue was brought in as CEO to revamp the pharm firm; and after TKT fought long court battles with Amgen and Genzyme over knockoff drugs, U.K.-based Shire Pharmaceuticals finally bought TKT in an all-stock deal. Astrue stepped down after TKT investors voted to OK the acquisition, leaving Shire Chairman and CEO Matthew Emmens atop the combined companies.