Evanston Woman Gets Prison Time For Insider Trading

CHICAGO — An Evanston woman who admitted to buying more than $280,000 in stock based on insider information was sentenced to a year and a day in federal prison.

Denise Grevas, 60, made the illicit purchases of stock in Alder Pharmaceuticals after learning from her husband that his employer, Lundbeck, a Danish drug company with U.S. offices in Deerfield, was about to purchase it.

Between August and September 2019, Grevas bought 30,800 shares of Alder stock, using five separate accounts. After its stock nearly doubled on the news of the pending acquisition, Grevas sold all of its stock, making nearly $287,000 in profit.

According to prosecutors, Grevas made the trades without her husband's knowledge. After her husband told her it was wrong to have made the purchase, she bought and sold more of the stock in September 2019.

While [Grevas] suggests that she cannot recall why she purchased additional [Alder] stock after being told it was wrong to have done so, the more plausible reason for [Grevas'] subsequent purchase of [Alder] stock was cover: [Grevas] may have believed that it would appear less suspicious to outsiders if she purchased [Alder] stock before and after the acquisition announcement," prosecutors said in a memo ahead of her sentencing.

Federal sentencing guidelines for the case called for Grevas to get between two and two-and-a-half years in prison.

Prosecutors called for a below-guideline sentence, although Assistant U.S. Attorney Jared Hasten said in the sentencing memo, it is important that she serve some time in prison. The U.S. attorney's office recommended a sentence of just over one year, which would allow Grevas to be released after about 10 months.

"A non-custodial sentence would send the wrong message: that insider trading is a victimless crime that does not carry with it meaningful punishment," Hasten said. "Insider trading violates the integrity of the stock market. It leads to widespread public cynicism that the markets are rigged in favor of those in the know. Insider trading must be met with a serious repercussion—which in this case should be a custodial sentence of a year and a day."

Defense attorney Patricia Brown Holmes described Grevas as an "ailing 60-year-old housewife" and portrayed the offense as "a one-off event based on an unexpected opportunity for an amateur trader." Holmes also submitted letters from Grevas' family and friends asking District Judge Harry Leinenweber to sentence her to probation instead.

Grevas' husband, who said his wife was not the kind of person who can survive in prison, said Grevas had "no idea or intent" to break the law when she bought stock in Alder.

"I later found out Denise was following the company closely and had traded the stock for years. Denise’s stock trading was a way for her to stay engaged and feel important and valued after being reorganized out of a long career. She did not know I was an insider or on an insider list until the morning of the September 16, 2019 announcement," he said in a letter to Leinenweber.

"I am filled with such painful regret from the past couple of years over that conversation that I initiated and feel responsible for setting in motion a series of events that have devastated my wife and our lives together. She has repeatedly tortured herself over a potential jail sentence which is her biggest fear and would be her destruction. If there is any way I could go to jail in her place I would gladly," her husband continued.

"I had been working 70+ hour workweeks for years at my company and was breaking down talking about the demands and stress, having talked about resigning for over 2 years. I had never been on a no-trade list before since my career was in middle management. I do know my wife trades but it did not occur to me that I needed to say to her directly 'don’t trade'. We were just talking. Well, I was talking and crumbling from relentless stress of another assigned project, never imagining that conversation would lead us to this point," he said. "As soon as I realized fully the series of events and understood what happened I was extremely upset. We knew we had to hire a lawyer to help us figure out what to do but we had never hired a lawyer before and struggled to find one. One of the lawyers we hired tried to tell us how to potentially skirt the law. That absolutely is not us and did not happen."

Related: Evanston Woman Accused Of Insider Trading On Over $280K Of Stock

Prosecutors acknowledge that Grevas repaid the money she made from the trades prior to sentencing. But they noted she only admitted to insider trading and pleaded guilty so after she was already under investigation by market regulators.

In January 2020, the Financial Industry Regulatory Authority sent a letter to Lundbeck listing everyone who had bought Alder stock ahead of the announcement of the acquisition, according to the government's sentencing memo. That list included Grevas and the family members whose accounts she used. Instead of responding, her husband resigned his position.

"While defendant ultimately admitted her conduct to the government, she only did so after the government learned about the trades at issue by reviewing financial records," Hasten said. "This is not a case where defendant came forward and admitted her conduct prior to the government becoming aware of any wrongdoing; rather, through its own investigation, the government uncovered defendant’s wrongdoing."

The Securities and Exchange Commission filed a separate, civil complaint against Grevas in August 2021. That case was put on hold pending the resolution of the criminal charge. In addition to sentencing her to 366 days in federal prison Leinenweber fined Grevas $100,000.

Related: Evanston Woman Pleads Guilty To Insider Trading