NEW YORK, Aug 22 (Reuters) - An investor formerly known as the "King of Biotech" has reached a settlement with the U.S. Securities and Exchange Commission over a market manipulation scheme, according to court documents filed on Thursday.
David Blech, who earned the nickname as a founder of companies and a major investor in the biotechnology sector, agreed to pay $1.03 million in disgorgement and interest for the scheme.
In 2012 the SEC had accused Blech of buying and selling significant amounts of stock in two biopharmaceutical companies, Pluristem Therapeutics Inc and Intellect Neurosciences Inc through more than 50 brokerage accounts he established in the names of family and friends in order to create an artificial appearance of activity in the stocks.
The SEC complaint further accused Blech, who had already been convicted of securities fraud in 1998, of selling investments for biopharmaceutical companies despite being barred from acting as a broker-dealer. It also accused him and his wife, Margaret Chassman, of violating federal securities laws by making unregistered sales of securities and failing to disclose their transactions in brokerage accounts.
Chassman agreed to pay close to $550,000 in disgorgement, interest and a civil penalty, according to the settlement.
The settlement was approved by Magistrate Judge Sarah Netburn in Manhattan federal court.
"He's pleased to be putting this episode behind him," Roland Riopelle, a lawyer for Blech, said on Thursday.
A lawyer for Chassman declined to comment.
In May, Blech was sentenced to four years in prison after pleading guilty in a related criminal case to stock manipulation stemming from his trades in Pluristem and Intellect.
The case is USA v David Blech, U.S. District Court, Southern District of New York, No. 12-cr-00372.