Samuel D. Waksal

LITIGATION RELEASE NO. 17559 / June 12, 2002

SECURITIES AND EXCHANGE COMMISSION V. SAMUEL D. WAKSAL

02-CIV-4407 (NB) (S.D.N.Y.)

On June 12, 2002, the Securities and Exchange Commission filed charges against the former CEO of ImClone Systems Inc. (IMCL), Samuel Waksal, for illegal insider trading. The Commission filed its complaint in the United States District Court for the Southern District of New York. In its complaint, the Commission charges that: (1) in late December 2001, Waksal received disappointing news about ImClone: the United States Food and Drug Administration (FDA) would soon issue a decision rejecting for review ImClone's pending application to market its cancer treatment, Erbitux; (2) Waksal told this negative information to certain family members who sold ImClone stock before the news became public; and (3) Waksal himself tried to sell shares of ImClone before the news became public.

The Commission's complaint alleges that based on this conduct, Waksal violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Specifically, the Commission's complaint alleges as follows.

• On the evening of December 26, 2001, Waksal learned that on December 28, 2001, the FDA would issue a Refusal to File (RTF) letter to ImClone rejecting consideration of its Biologics Licensing Application for Erbitux.

• The same evening and early the next morning, Waksal called certain family members to alert them that ImClone would be receiving this bad news.

• As soon as the market opened the next morning, December 27, these family members sold more than $9 million of ImClone stock. In total they sold more than $10 million of ImClone stock over the next two days.

• Also starting that evening, December 26, and through December 28, Waksal himself tried to sell 79,797 shares of ImClone stock worth nearly $5 million. He was unable to do so only because two different broker-dealers would not execute the orders.

• As expected, the FDA faxed ImClone the RTF letter at about 4 p.m. on December 28, 2001. At 6 p.m. that day, ImClone publicly announced the FDA decision. By the close of trading on December 31, the next trading day, ImClone's stock price had dropped 16%, from $55.25 to $46.46.

• By selling before the announcement that ImClone had received an RTF letter from the FDA, Waksal family members avoided losses of several million dollars.

In its lawsuit, the Commission seeks an order requiring that Waksal disgorge the losses avoided by those family members he tipped, and that he pay civil penalties and prejudgment interest. It also seeks an order permanently enjoining Waksal from violating the securities laws, and barring him from acting as an officer or director of a public company.

The Commission's investigation is ongoing. The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York in the investigation of this matter.

SEC Complaint in this matter.