NeuroSearch A/S was convicted of share manipulation in Copenhagen district court today. In a case brought by the state, the company was found guilty of violating the rules of the Danish securities and trading act and ordered to pay a 5 million kroner fine.
In February 2010, NeuroSearch’s announced that it’s phase III study of the Huntington’s drug Huntexil were showing top results, causing value of shares in NeuroSearch to skyrocket, and the company's market value increased from just over two billion krone to more than double at 5.4 billion kroner. Over a short period, it became apparent that the drug was not performing as well as the company had claimed.
The court held NeuroSearch liable for the announcement containing incorrect or misleading signals. Flemming Pedersen, who headed up the company at the time, was also fined one million kroner.
“We are very surprised and deeply disappointed by the Court's ruling that the results from a clinical study presented by the company in 2010 contained share price signals which were so misleading that it has been deemed share price manipulation,” said chairman of NeuroSearch’s board of directors, Karin Garre in a statement. "This perspective of the situation is not shared by NeuroSearch".
NeuroSearch and Pedersen had pleaded not guilty.
The company now has two weeks to decide whether to appeal the District Court judgment to the Danish High Court.