AVEO Pharmaceuticals, Inc., et al.

Litigation Release No. 24442 / April 4, 2019

Securities and Exchange Commission v. AVEO Pharmaceuticals, Inc., et al., No. 1:16-cv-10607-NMG (D. Mass. March 29, 2016)

The Securities and Exchange Commission obtained a final judgment against David Johnston, the former Chief Financial Officer of Massachusetts-based biotech company, AVEO Pharmaceuticals, Inc.

On March 29, 2016, the SEC charged Johnston, AVEO, and two other AVEO officers with defrauding investors through misleading statements about the prospect for FDA approval of AVEO’s flagship drug. In addition, during the time period of the fraud, Johnston traded in AVEO stock when the FDA’s complete views were not revealed to the market. On November 20, 2018, a jury found Johnston liable for fraud. On March 25, 2019, the United States District Court for the District of Massachusetts entered final judgment against Johnston, barring him from serving as an officer or director of a public company for two years and imposing a $120,000 penalty. The final judgment also ordered Johnston to pay disgorgement of $5,677, representing his loss avoided from sales of AVEO stock that were not subject to a pre-existing trading plan, plus prejudgment interest, and enjoined him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13a-14 thereunder.

AVEO previously agreed to pay a $4 million penalty to settle the SEC’s charges without admitting or denying the allegations in its complaint, and the SEC obtained final judgments against the two other former AVEO executives.

The SEC’s litigation was handled by Susan Cooke Anderson, Eric Forni, and Chip Harper.

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