Galena Biopharma Inc. and former CEO Mark Ahn reached an agreement in principle to a proposed settlement that would resolve an investigation by the SEC regarding the commissioning of internet publications by outside promotional firms from 2012 to 2014.
The settlement would entail the company and the CEO consenting to the entry of an administrative order requiring them to cease and desist from any future violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 without admitting or denying the findings in the order.
Galena will make a penalty payment of $200,000 under the proposed settlement, which would also require Ahn to make a disgorgement and prejudgment interest payment as well as a penalty payment to the SEC.
A special committee of the board determined, in response to an indemnification claim by Ahn, that Galena is required under Delaware law to indemnify Ahn for the disgorgement and prejudgment interest payment of about $750,000 that he would have to pay if and when the settlement is approved. Any penalty payment that Ahn will be required to make in connection with this matter, which is $600,000 under the proposed settlement, will be the responsibility of the former CEO.
Galena will also implement certain remedial actions relating to securities offerings and its interactions with investor relations and public relations firms to address the issues raised by the SEC investigation.