Two Israelis are at the center of recent developments in the ImClone Systems (Nasdaq:IMCL) insider information affair, which led to the jailing of Martha Stewart. Dr. Zvi Fuks, chairman of radiation oncology at Memorial Sloan-Kettering Cancer Center in New York, and Sabina Ben-Yehuda, an investment manager in start-ups living in New York, were arrested on charges stemming from sales of ImClone stock on Dec. 27, 2001.
The two people were indicted in US District Court in Manhattan. Fuks and Ben-Yehuda were both associates of former ImClone chairman Samuel Waksal. Fuks and Ben-Yehuda are accused of selling ImClone shares in late 2001 on the basis of insider information obtained from Waksal that the share was about to plummet. They pled not guilty.
The indictment states that Waksal learned on November 26, 2001, that the US Food and Drug Administration (FDA) was about to reject the company's application for its cancer treatment. Before traded opened the next day, Waksal told Ben-Yehuda that ImClone's share seemed expensive and would probably plummet. The indictment claims that Ben-Yehuda passed this information onto Fuks, and that they both immediately sold shares. Fuks gave sell orders for shares worth $5.3 million, and Ben-Yehuda for shares worth $74,000.
Waksal was sentenced to 87 months in prison after pleading guilty in October 2003. He will now testify against Ben-Yehuda and Fuks. Waksal's friend, Martha Stewart, was released from prison last Friday after a five-month sentence.
Fuks was a member of ImClone's science board in 2001, and has been a friend of Waksal for 30 years. Waksal has another connection with Israel: he was a director in Israeli drug discovery company Pharmos (Nasdaq: PARS).
Published by Globes [online], Israel business news - www.globes.co.il - on March 10, 2005