Watchdog urges SEC to investigate vaccine maker Moderna
An anti-corruption watchdog group is urging the U.S. Securities and Exchange Commission to investigate top executives at Moderna, the biotech firm developing a promising coronavirus vaccine, for allegedly manipulating the stock market.
"This misconduct was particularly egregious because it involved not only financial fraud and manipulation of the financial markets, but also because it exploited widespread fears surrounding the ongoing COVID-19 pandemic," wrote Kyle Herrig, who heads Accountable.US, in a letter to the SEC. "I strongly urge the SEC to investigate these matters."
The group's concerns center on insider trading activity at Moderna after the company last month announced positive results in Phase 1 trials of its coronavirus vaccine. The news pushed up the company's stock price 30% to an all-time high of $87. In the days following the announcement, Moderna's CEO, other executives and funds controlled by the chairman of its board sold about $90 million worth of company shares.
Accountable.US sent its letter, a copy of which was provided to CBS MoneyWatch, on Tuesday to Joseph Sansone, who heads the SEC's market abuse unit. The agency declined to comment on the letter or whether it is looking into allegations against Moderna and its executives. Herrig said he hasn't received a response from the SEC.
Moderna on Wednesday defended the stock sales that aroused Accountable.US' suspicion.
"Executive sales are made under pre-planned 10b5-1 plans, which are executed during open trading windows in accordance with the company's insider trading policy," the company said in a statement to CBS MoneyWatch. "As a matter of practice, Moderna does not intend to comment on any alleged or potential litigation or investigation; nor on purchases or sales by individual investors or groups."
Moderna's vaccine results have yet to be reviewed by outside experts or published in a medical journal, and some have questioned whether the company was too quick in publicizing the trial data. Shares of the company sunk as low as $52 last week, but have since rebounded to $59, slightly below its stock price before the preliminary testing results were released.
Moderna's executives have continued to sell their shares. On Tuesday, the company disclosed that CEO Stephane Bancel had cashed in an additional $1.9 million in stock. Chief Medical Officer Tal Zaks also netted an additional $6.7 million in stock sales in which he liquidated his entire holding of Moderna shares, according to a filing with the SEC. Zaks still holds options to buy an additional 118,000 Moderna shares.
In the letter to the SEC, Herrig called the timing of the post-announcment trades suspicious, and questioned whether the company and the executives had coordinated ahead of releasing the trial results, including when the shares would be sold. Accountable.US is a non-profit supported by the New Venture Fund, which funds left-leaning policy groups.
"Evidence suggests that Moderna and at least two of its officers, possibly among others, may have improperly exploited coronavirus fears to boost the company's value, as well as their own bank accounts," Herrig wrote.
On Wednesday, medical news website Stat reported that Bancel recently told investors at a conference that Moderna rushed out its coronavirus testing results in order to avoid a possible leak of the findings. Dr. Anthony Fauci, the government's top infectious disease official, said that the Phase 3 trial of Moderna's vaccine could start as early as July.