Rev. Emmanuel Lemelson exits the federal courthouse in Boston, Massachusetts, U.S. November 3, 2021. Picture taken November 3, 2021. REUTERS/Nate Raymond

Jury in SEC case finds priest shorting biotech’s stock made false statements

A federal jury in Boston on Friday discovered {that a} Greek Orthodox priest, who can be a hedge fund supervisor, deliberately or recklessly made false statements a couple of California biotech firm whereas betting in opposition to its stock.

However the jurors in the U.S. Securities and Alternate Fee’s case in opposition to Rev. Emmanuel Lemelson delivered a blended verdict, rejecting claims he engaged in a scheme to defraud his fund’s traders or these of Ligand Prescribed drugs Inc.

Lemelson, who was born Gregory Lemelson, is the chief funding officer of Lemelson Capital Administration, which manages a hedge fund referred to as The Amvona Fund LP. He advocates an funding philosophy based mostly on Christian ethics.

The SEC had alleged he engaged in a “short and distort” scheme by shorting the San Diego-based firm’s stock after which manipulating its worth by means of lies, incomes $1.3 million in the method. Quick-sellers revenue when a stock worth declines.

SEC legal professional Marc Jones indicated it’ll ask U.S. District Choose Patti Saris to enjoin him from violating securities legal guidelines and order Lemelson to disgorge any ill-gotten positive aspects and pay penalties.

Lemelson’s lawyer, Douglas Brooks of Libby Hoopes Brooks, mentioned the jury rejected the “most serious charges.” He referred to as the decision in any other case disappointing and mentioned Lemelson would enchantment. He had argued that Lemelson had made the statements at concern in good religion.

In a 2018 lawsuit, the SEC mentioned Lemelson, whereas holding a $4.6 million quick place in Ligland’s stock, had in 2014 attacked the corporate in the media and thru analysis experiences in a public marketing campaign that induced its market worth to drop by $500 million.

The SEC claimed Lemelson made 4 false statements concerning the viability of Ligland’s flagship Hepatitis C drug, Promacta, its monetary situation and its relationship with one other firm.

Jurors discovered he made three false statements, together with by saying throughout a radio interview that Promacta was “literally going to go away” and that firm representatives “basically agreed with him.”

Lemelson’s legal professionals referred to as the lawsuit an effort by Ligand to “squash” him, saying the SEC solely opened a case after convincing then-Consultant Duncan Hunter of California to write down a letter recommending an investigation.

The case is U.S. Securities and Alternate Fee v. Lemelson, et al, U.S. District Court docket for the District of Massachusetts, No. 18-cv-11926.

For the SEC: Alfred Day and Marc Jones of the SEC.

For Lemelson: Thomas Hoopes, Douglas Brooks and Brian Sullivan of Libby Hoopes Brooks

Nate Raymond

Nate Raymond experiences on the federal judiciary and litigation. He will be reached at [email protected]