SEC Drops Insider-Trading Probe of ICN and Panic

The Securities and Exchange Commission is dropping its 3-year-old investigation of alleged insider trading by ICN Pharmaceuticals Inc. and its chairman, Milan Panic, lawyers for the Costa Mesa drug company said Monday.

The agency’s inquiry had focused on Panic’s highly publicized 1994 sale of 55,000 company shares, worth $1.2 million, the day after he learned the government wouldn’t approve the sale of ICN’s drug ribavirin as a stand-alone treatment for the serious liver ailment hepatitis C.

The agency, narrowing its investigation, now plans to file a civil lawsuit in U.S. District Court in Los Angeles, claiming ICN failed to make a timely, accurate disclosure of the government’s denial to investors, said Arnold Burns and Greg Mashberg, partners in a New York law firm that represents Panic and the company.

Agency officials wouldn’t comment.

Burns said SEC lawyers alerted the company within the last two weeks that it was pulling back its inquiry. “It’s an enormous victory for Mr. Panic and the company,” Burns said.

Company lawyers said the commission is overriding staff recommendations that Panic be banned as an officer of the company and fined up to $1 million in connection with the insider-trading allegations.

Burns said the commission threw out the allegations because evidence shows that Panic made plans to sell the shares weeks before the sale.

On Monday, ICN shares closed on the New York Stock Exchange at $15.25, up 38 cents.

Lawyers said a federal grand jury in Los Angeles continues to investigate alleged insider trading involving Panic and the company.

Panic has denied any wrongdoing.