Denise Grevas was charged Wednesday for insider trading after making $286,960 in illegal profits from the stock market, a criminal filing alleged. The 60-year-old woman, who lived in Evanston, Illinois, reportedly used insider information to profit off of stocks purchased from her husband’s company.
Grevas is accused of purchasing shares of a company after learning from her husband that his employer was going to acquire that company. Knowing the acquisition would increase the price of the stock, Denise Grevas bought 30,800 shares across five accounts she controlled, spending around $280,787. The stocks, which ranged in price between $9.46 and $10.13 at the time, doubled a few days later.
According to the criminal filing, Denise Grevas was charged with one count of securities fraud and a two-count civil suit from the U.S. Securities Exchange Commission. The filing alleged that she used her knowledge of a corporate takeover in the pharmaceutical industry two years ago to illegally profit off of the stock market.
Grevas’ husband worked as a senior manager in the human resources division of Lundbeck, a multinational pharmaceutical company. The company is based in Copenhagen, Denmark but its primary North American offices are in Deerfield. Lundbeck was planning to acquire Alder BioPharmaceuticals sometime in September 2019. Alder BioPharmaceuticals was a publicly-traded pharmaceutical company that developed migraine medication.
On Aug. 19, Denise Grevas’ husband learned about the acquisition, though that information was confidential. Before the acquisition, Grevas managed five brokerage accounts, spending her time actively trading stocks on a daily basis. SEC attorney Richard Stoltz said that “during the relevant period, Grevas did not work outside of her home and spent her time actively trading stocks.”
“She regularly watched television programs about securities trading, read financial literature, and closely followed certain biopharmaceutical stocks,” he added. Stoltz said that during a phone call with his wife, Grevas’ husband accidentally leaked the information regarding the acquisition because he was complaining that he would have to do a lot of extra work.
Assistant U.S. Attorney Matthew Madden pointed out that “Grevas knew that [her husband] expected that she would maintain of the confidentiality of any material nonpublic information she obtained from him, and understood that she could not use or share confidential information she obtained or learned from [her husband] that had been entrusted to [him] through his employment with [Lundbeck.]”
Between Aug. 19 and Sept. 13, Denise Grevas purchased shares of Alder BioPharmaceuticals. She allegedly used confidential information to make informed decisions regarding her trading practices – also known as insider trading. She believed that an acquisition would drastically increase the stock price when the information was made public. Her intuitions were right.
On Sept. 16, after Grevas purchased more than 30,000 shares across all five of her brokerage accounts, Lundbeck and Alder announced the $1.95 billion acquisition. The price per share doubled, closing at $18.50 – a significant jump from the $9.46 stocks price at which Grevas purchased most of her shares. The SEC complaint alleged that Grevas “obtained realized and unrealized gains of $286,960 as of the end of the day of Lundbeck’s announcement.”
The complaint also alleged that Grevas’ husband was unaware of her actions and only found out after the acquisition was complete. During a phone call after the September 16 announcement, Grevas informed her husband about the stocks she had purchased in the weeks prior to the announcement. The complaint alleged that her husband “became upset” with her, and told her that “she should not have traded in Alder stock because he was an insider and knew about the acquisition.”
Over the course of five days, Grevas sold her 30,800 shares in Alder. She first dumped 20,600 shares on the day of the announcement, earning $287,000 in illegal profits. She sold the rest on September 20 for an unspecified amount. Denise Grevas was ordered to turn over the $286,960 upon her conviction. A conviction for a securities fraud charge is punishable by up to 20 years in federal prison.
It was reported that Grevas’ husband resigned from Lundbeck in 2020. While Grevas is charged with a crime, it is not evidence of guilt. However, Patch reported that prosecutors charged Denise Grevas with a one-count information filing which only covered a single order of 100 shares of Alder stock. This might indicate that attorneys have made arrangements to secure a guilty plea.