NeuroSearch and former CEO, Flemming Pedersen, has been convicted of market manipulation, the City Court of Copenhagen informs Friday. NeuroSearch has been met with a fine of DKK 5 million, while Flemming Pedersen has been fined DKK 1 million.

“In delivering the verdict, the court stressed that T2 (Flemming Pedersen, ed.) was aware that the primary endpoint had not been met. It also stressed that T2 had acquired share options several years prior, which T2 sold on March 10, 2010, giving him a earnings of about DKK 214,000,” the city court writes in a release.

“Taking into account that T2 only received a modest gain relative to his salary in T1, we found no evidence that the possible gain from the share transaction was the motive behind the drawing of the incorrect stock market release,” the court adds.

Concerning the size of the fine given to Flemming Pedersen, the court states:

“In determining the size of the fine, we have emphasized T2’s position in the company, his annual salary of DKK 7 million and, additionally, the estimated value the MermaiHD study would have had to the company at the time.”

The backdrop

The verdict came in response to a stock market release from February 3, 2010, when the company’s management reported top line results from a phase III study with the drug Huntexil as a treatment of Huntington’s disease, dubbed MermaiHD.

The announcement made the share price surge by a staggering 98% that same day – a tendency that continued during the following days and the price rose to DKK 224 on February 5, 2010.

On April 28, 2010, NeuroSearch published an amended announcement to the market concerning the study results from February 3, 2010. That correction made the share price drop 30% to 120.

It is this course of events which has led the Danish economic crime department to prosecute the company on charges of market manipulation of a particularly severe nature.

 Neurosearch sacks CEO 

 Neurosearch welcomes merger 

 Neurosearch writes down the value of Huntexil to 0 

 Neurosearch is emptying out the cash register

- translated by Martin Havtorn Petersen

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