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FEDS SAY RAUCH TIPPED OFF BY ADVANCED CELL EXEC PRIOR TO STOCK SPIKE
The Securities and Exchange Commission today officially charged Beaufort Mayor Bill Rauch with insider trading, claiming that he bought stock in a California company after federal regulators say he learned confidential information about the firm.
The Associated Press is reporting that Ruach, who is the brother-in-law of Gov. Mark Sanford, was told by an executive at Advanced Cell Technology Inc. that the company would be publicizing an embryonic stem cell technique. Rauch then purchased an undisclosed amount of stock in Advanced Cell, according to the complaint filed Wednesday in San Francisco.
Rauch, who first bought stock in Advanced Cell in July 2000, agreed four years later to refer potential investors to the company, in exchange for an option to buy 48,000 stock shares and a referral fee, the SEC said.
Under that agreement, Rauch was also barred from “us(ing) any Confidential Information for (his) own benefit or for any purpose other than this Agreement” and was required to “hold all Confidential Information in strict confidence and … not disclose any Confidential Information to any third party,” according to the SEC complaint.
On Aug. 3, 2006, an Advanced Cell executive told Rauch about an upcoming article about the company’s ability to create human stem cell lines from a single embryonic cell without harming the embryo’s developmental potential. That same day, Rauch called a securities broker and opened brokerage accounts in his name and the names of his children, purchasing a total of 33,160 Advanced Cell shares over the next weeks for about $11,000, regulators said.
When Advanced Cell publicly announced the development on Aug. 23, 2006, its stock price soared more than 360 percent — meaning Rauch’s investment was worth more than $60,000.
Rauch has agreed to pay nearly $44,000 in penalties without admitting or denying the allegations. Reached at his office Wednesday, he confirmed the charges and penalties but declined to make further comment. [MED KINNARD - AP]
Rauch will pay $20,708 in disgorgement, $2,576 in prejudgment interest, and a $20,708 penalty but will not have to admit or deny the allegations.
This is truly unfortunate as Rauch is by all accounts a good man. It is unclear what will happen to his position as mayor, but I wish he and his family the best in this situation.
Beaufort Mayor Bill Rauch in Hot Water Again!
This is the second time in a matter of months that the Mayor has been in hot water and escaped relatively unscathed.
In April, the State Ethics Commission dismissed charges that Rauch abused his office during the McLeod Farm annexation process. The ethics commission found probable cause, but the complaint was dismissed
Yeah, it’s unfortunate when privileged Republicans break the law. I’m crying my eyes out. It’s funny that “law-and-order conservatives” sound a lot different when friends and colleagues find themselves in the hoosegow.
The mayor of Beaufort is the brother in law of the Governor??? Isnt that kinda close to neopotism,too??
Yeah Mayor Quinby, I cry for the corrupt scarlet R’s too and there are more stories to come…..
Some of em right tremendous………
Advanced Cell Technology short on cash….fly-by-night…
“Executives of ACT said they pioneered research that could one day be used to reverse the aging process and grow replacement body parts. And ACT said it cloned the first human embryo, a discovery that sparked headlines worldwide”.
“But all the publicity likely backfired. Former chief executive Michael West was compared in news reports to famed circus promoter P.T. Barnum. Some scientists said some of ACT’s claims were overstated. And a former ACT executive said the company’s work in controversial areas such as stem cell research and cloning scared away pharmaceutical firms and life sciences investors that traditionally fund young promising biotech companies”.
“Now, ACT could be on the verge of shutting down. In a Securities and Exchange Commission filing Tuesday, the company warned that it doesn’t have cash to continue operating after July 31 without raising additional money or drastically slashing operations. It reported $17 million in current liabilities, but only $1 million in cash and other current assets, an indication it could be forced to file for bankruptcy protection. And ACT’s stock, which was as high as $8 per share three years ago, closed yesterday at 2.5 cents a share”.
“But ACT has been dogged by complaints that it over-hyped its research, which may have hurt its ability to sign deals with drug companies and attract investors”.
…”three scientists resigned from the editorial board of the online scientific journal e-biomed after it reported ACT’s claim to have successfully cloned the first human embryo. Critics said the experiment was actually a failure”.
“Indeed, the company didn’t go public through a traditional initial public offering, where companies need backing from investment banks and institutional investors. Instead, it completed a reverse merger with a dormant Utah company that formerly marketed Native American figurines in 2005″.
“ACT also has other problems, including an exodus of executives. Dr. West himself (President and CEO of Advanced Cell Technology) left in October to join BioTime Inc., an Alameda, Calif., company that plans to develop medical products using stem cell technology. The company’s general counsel, Jonathan Atzen, resigned March 7. And the company’s chief accounting officer, Ivan Wolkind, quit March 17. The company still had four dozen employees as of March”.
“And ACT now faces legal action. In January, West filed for arbitration claiming the company owes him $26,250 in unpaid consulting fees, plus interest and attorney fees. In May, the company’s former “chief development officer”, Pedro Huertas, filed an arbitration claim saying the company owes him a year’s severance pay and wrongfully fired him after he refused to fire a woman who said she was sexually harassed. He is seeking $340,000, plus attorney’s fees. And a former landlord, Alexandria Real Estate, is seeking back rent and other damages”.
“But ACT’s filing with the SEC did not give any indication it was close to raising the money it needs. “There continues to be substantial doubt about the company’s ability to continue as a going concern,” the company wrote”.
http://www.boston.com/business/healthcare/articles/2008/07/17/fame_courting_biotech_running_short_of_cash/?page=1
“This is truly unfortunate as Rauch is by all accounts a good man. It is unclear what will happen to his position as mayor, but I wish he and his family the best in this situation”
Give me a break… I guess because he is a relative of Sanfords..he is wished “the best”…and is “a good man”…
You didnt go looking for the personal character of James Clyburns family members when they were talked about …..but then they arent radical republicans either…
How about talking about how Sanfords Father-in-law was appointed to the Beaufort sewer commission…thus getting major insight into future development in Beaufort..by none other than Sanford himself..
funny thats not a story you seem to be looking into…
Joseph,
Before you make the comment that I’m some kind of Sanford shill, I would suggest scrolling up to the search box and typing in “Mark Sanford.” Read through a few of those stories and see if your opinion changes. Better yet, call over to the governor’s office and ask them what they think about me.
The bottom line is that Rauch is a good man. It has nothing to do with Sanford. I wrote that statement because that’s how I feel.
- A.F.
Beaufort City Councilman Gary Fordham wants city council to put Mayor Bill Rauch in the hot seat …has asked Mayor Bill Rauch to call a special council meeting to address two allegations of impropriety against the mayor. One other city councilman, George O’Kelley, has said he thinks Rauch should resign.
“We don’t have a lot of (legal) options available, but I don’t think (Rauch) respects the office of mayor,” Fordham said.
Rauch met with Fordham following Thursday’s meeting of the city’s Redevelopment Commission, which includes the council members. After their conversation, Rauch said he would not call a special meeting unless a majority requested it.
http://www.beaufortgazette.com/local/story/496406.html
Now that is hysterical. Adam as Sanford’s shill? Wow.
Oh now don’t get me mistaken; certainly a shill, yes, just not Sanford’s shill.
It’s a harmless kind of shilling, anyway, because any person who takes five minutes to look around any state politics related post can easily figure out who’s mouthpiece you are, what their agenda is, and to take everything with a heavy grain of salt. That’s one of the things I like about you Adam; your consistency.
Hey Bill,
You said” because any person who takes five minutes to look around any state politics related post can easily figure out who’s mouthpiece you are, what their agenda is, and to take everything with a heavy grain of salt.”
I have no agenda and I am no one’s mouthpiece except exclusively for myself. How come everyone is supposed to have an agenda? Some of us want things the way they were and always have been and are supposed to be. We still respect the rule of law and our our country for the freedom and opportunities granted to ALL citizens regardless of race, religion, disability, sexual orientation, and age.The agenda in DC and our local capital has changed. It doesn’t benefit the people that the elected people represent. Some of us are mouthpieces for the We the People. Does that come through too?
Uhh…? That was directed at Adam.
Well there could be two classifications of agenda, the “Stuff I care about” and the “Stuff I have a direct and tangible interest in what happens.” The more effort someone puts into whatever they’re doing, the more likely they reside in category two.
Also: http://en.wikipedia.org/wiki/Appeal_to_tradition
The agenda in DC has not changed; it hasn’t been about “we the people” since the industrial revolution raised the stakes. It has always been a gorilla trying to break free from it’s constitutional chains, and today each and every one of us gets to enjoy the consequences of the freedoms that gorilla now possess as a result of it’s dilligent efforts to escape, from the 1800’s, to now.
Great, you are fined for insider trading in a company that is going under. I would suggest a new insider trading broker.
MAYOR RESIGNING
Bill Rauch is resigning.
http://www2.beaufortgazette.com/blogs/post/21600#comment-56873
Mayor resigns amid controversy
http://www.beaufortgazette.com/developing_stories/story/498826.html
Ad hominem? Then again this is under the presumption that SC has politicians with moral character which can be attacked.