SEC v. Robert Lozuk, No. 3:18-cv-01765-LAB, Southern District of California (Aug. 1, 2018) — Complaint

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ADRIENNE D. GURLEY
Email:  [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
John W. Berry, Associate Regional Director
Amy Longo, Regional Trial Counsel
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

vs.
ROBERT LOZUK
Defendant.

 Case No.

COMPLAINT

Plaintiff Securities and Exchange Commission (“SEC”) alleges:
SUMMARY
1. In July 2016, Robert Lozuk (“Lozuk”) engaged in insider trading in the
securities of Sequenom, Inc. (“Sequenom”), a San Diego life sciences company that
provides molecular diagnostic testing services, with an emphasis on noninvasive prenatal
testing.  Lozuk, a high-level officer at Sequenom, breached a duty he owed to his
employer when he knowingly provided his friend-tippee (“Individual A”) with material
nonpublic information relating to Laboratory Corporation of American Holding’s
(“LabCorp”) bid to acquire Sequenom through a tender offer.  Individual A then used the
material nonpublic information to place illegal trades in Sequenom stock before the

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public announcement of the acquisition.
2. On July 21, 2016, less than a week before the merger announcement,
Lozuk knowingly tipped Individual A, who was not a Sequenom employee, about the
merger.  Lozuk knew that the information was material nonpublic information when he
told Individual A.  On the basis of Lozuk’s tip, Individual A purchased $18,000 worth of
Sequenom stock between July 22 and 25, 2016, at prices ranging from $0.86 to $0.88 per
share.
3. On July 27, 2016, LabCorp and Sequenom issued a joint press release
announcing the merger agreement by which LabCorp would acquire all of the
outstanding shares of Sequenom in a cash tender offer of $2.40 per share, or $371
million.  That day, the price of Sequenom stock increased 176%.  Immediately following
the announcement, Individual A sold all of his Sequenom shares, reaping ill-gotten gains
of $26.643.80
4. By engaging in the conduct described in this Complaint, Lozuk violated
Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 (“Exchange Act”) [15
U.S.C. §§ 78j(b), 78n(e)] and Rules 10b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.10b-
5, 240.14e-3].
JURISDICTION AND VENUE
5. The SEC brings this action pursuant to Sections 21(d), 21(e), and 21A of
the Exchange Act to enjoin the acts, practices, and courses of business alleged in this
Complaint, and to obtain civil money penalties, an order barring Lozuk from acting as an
officer or director of a public company, and such other and further relief as the Court
may deem just and appropriate [15 U.S.C. §§ 78u(d), 78u(e), and 78u-1].
6. The Court has jurisdiction over this action pursuant to Sections 21(d),
21(e), 21A, and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 78u-1, and
78aa(a)].
7. Defendant, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national

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securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
8. Venue is proper in this district pursuant to Section 27(a) of the Exchange
Act [15 U.S.C. § 78aa(a)] because certain of the transactions, acts, practices and courses
of conduct constituting violations of the federal securities laws occurred within this
district.  In addition, venue is proper in this district because Defendant Robert Lozuk
resides   in this district.
THE DEFENDANT
9. Robert Lozuk, age 39, lives in Carlsbad, California and between June
2015 and October 2016 was the Senior Vice President of Commercial Operations at
Sequenom, where he was employed since October 2012.
RELEVANT ENTITIES AND INDIVIDUAL
10. Sequenom, Inc. is a Delaware corporation headquartered in San Diego,
California.  Sequenom is a life sciences company that provides molecular diagnostic
testing services, with an emphasis on noninvasive prenatal testing.  Sequenom was
acquired in a 2016 tender offer by LabCorp, and is now a wholly-owned subsidiary of
LabCorp.  Sequenom’s common stock was formerly registered with the SEC pursuant to
Section 12(b) of the Exchange Act, and was traded on the NASDAQ (ticker: SQNM).
11. Laboratory Corporation of America Holdings, is a Delaware
corporation headquartered in Burlington, North Carolina.  The common stock of
LabCorp is registered with the SEC pursuant to Section 12(b) of the Exchange Act and is
traded on the New York Stock Exchange (ticker: LH).
12. Individual A is a childhood friend of Lozuk.
FACTUAL ALLEGATIONS
13. Sequenom is a life sciences company that provides molecular diagnostic
testing services, with an emphasis on noninvasive prenatal testing.  On June 8, 2016,
Sequenom’s board of directors instructed a large investment bank to contact LabCorp
and a few other companies to assess their interest in acquiring Sequenom, which was

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subject to a large amount of outstanding debt.  Sequenom engaged in due diligence and
entered into negotiations with LabCorp, and on July 20, 2016, representatives of
Sequenom and LabCorp agreed upon an acquisition price of $2.40 per share.
14. At the time of the acquisition, Lozuk was the Senior Vice President of
Commercial Operations at Sequenom, and a direct report to the CEO.  In addition to the
duties imposed on Lozuk as an officer and director of Sequenom, Lozuk was also subject
to Sequenom’s written policy, applicable to all Sequenom employees, preventing insider
trading and its code of conduct.  Further, Lozuk had signed a confidentiality letter in
October 2015 acknowledging his obligation not to disclose to  anyone, including certain
other co-workers, material nonpublic information regarding Sequenom’s efforts to
address the company’s outstanding debt obligations.   Ultimately, the board of directors
decided to seek an outside buyer.   By at least June 8, 2016, Lozuk became aware of the
potential for an outside company to acquire Sequenom.
15.   On July 21, 2016, Lozuk attended a concert with Individual A.  Having
signed the October 2015 confidentiality letter, Lozuk knew that he owed a duty to
Sequenom not to provide any material nonpublic information regarding the contemplated
LabCorp-Sequenom deal to Individual A.  Nevertheless, while at the concert, Lozuk told
Individual A that LabCorp was about to purchase Sequenom.   At the time of the tip,
Sequenom’s shares were trading close to $1.  Individual A knew that Lozuk was
providing this material nonpublic information in breach of a duty Lozuk owed to
Sequenom.
16. On July 27, 2016, the companies announced that LabCorp, through its
wholly owned subsidiary Savoy Acquisition Corp., would acquire all of the outstanding
shares of Sequenom in a cash tender offer for $2.40 per share, or $371 million including
Sequenom’s net indebtedness.  After the announcement of the merger, Sequenom’s stock
price increased 176% to $2.35 per share.  The total daily trading volume increased from
363,087 on the day before the announcement to 40,718,435 on the day of the
announcement – an increase of 11,214.5% in one trading day.

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17. Immediately following the announcement of the LabCorp-Sequenom
merger on July 27, 2016, Individual A sold all of his shares for a realized profit of
$26,643.80.
18. Lozuk tipped Individual A with information concerning the LabCorp
acquisition that he knew, or was reckless in not knowing, was material and nonpublic.
19. Lozuk knew, or was reckless in not knowing, that he owed a fiduciary duty
and other duties of trust and confidence to Sequenom and its shareholders, to maintain
the confidentiality of the material nonpublic information that he possessed in his
capacity as a senior vice president and employee of Sequenom.  By providing Individual
A with material nonpublic information, Lozuk breached the fiduciary duty and other
duties of trust and confidence that he owed to Sequenom and its shareholders.  Either
directly or indirectly, Lozuk gained, or expected to gain, a personal benefit from
conveying to Individual A material nonpublic information in the form of a gift to a
childhood friend.
20. At the time Lozuk tipped Individual A, and at the time Individual A traded
on the basis of material nonpublic information, LabCorp had taken a substantial step or
steps to commence its tender offer for Sequenom.
FIRST CLAIM FOR RELIEF
Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
21. The SEC realleges and incorporates by reference paragraphs 1 through 20
as though fully set forth herein.
22. By engaging in the conduct described above, Lozuk, in connection with the
purchase or sale of securities, directly or indirectly, by the use of the means or
instrumentalities of interstate commerce, or of the mails, or of the facilities of a national
securities exchange, with scienter:
 (a) employed devices, schemes, or artifices to defraud;
 (b) made untrue statements of material fact or omitted to state
 material facts necessary in order to make the statements made, in

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 the light of the circumstances under which they were made, not
 misleading; and/or
  (c) engaged in acts, practices, or courses of business which operated
 or would operate as a fraud or deceit upon other persons,
 including purchasers and sellers of securities.
23. By engaging in the foregoing conduct, Lozuk violated Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
SECOND CLAIM FOR RELIEF
Violation of Section 14(e) of the Exchange Act and Rule 14e-3 Thereunder
24. The SEC re-alleges and incorporates by reference Paragraphs 1 through 20
above as if they were fully set forth herein.
25. By engaging in the conduct described above, Lozuk, prior to the public
announcement of the tender offer, and after a substantial step or steps to commence the
tender offer had been taken, while in possession of material information relating to the
tender offer, which information he knew or had reason to know was nonpublic and had
been acquired directly or indirectly from the offering company, the issuing company, or
any officer, director, partner, employee, or other person acting on behalf of the offering
or issuing company, purchased or caused to be purchased or sold or caused to be sold the
securities sought or to be sought by such tender offer.
26. By reason of the actions alleged herein, Lozuk violated and, unless
restrained and enjoined, will continue to violate Section 14(e) of the Exchange Act [15
U.S.C. § 78n(e)] and Rule 14e-3 thereunder [17 C.F.R. § 240.14e-3]
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue a judgment  permanently enjoining Lozuk, and his officers, agents, servants,
employees and attorneys, and those persons in active concert or participation with any of
them, who receive actual notice of the judgment by personal service or otherwise, and

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each of them, from violating Sections 10(b) and 14(e) of the Exchange Act [15 U.S.C.
§§ 78j(b), 78n(e)] and Rules 10b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.10b-5,
240.14e-3].
II.
Order Defendant to pay a civil penalty under Section 21A of the Exchange Act

[15 U.S.C. § 78u-1].
III.
Prohibit Lozuk, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. §
78u(d)(2)] from acting as an officer or director of any issuer that has a class of securities
registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is
required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. §
78o(d)] for a period of five years.
IV.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of all
orders and decrees that may be entered, or to entertain any suitable application or motion
for additional relief within the jurisdiction of this Court.
V.
Grant such other and further relief as this Court may determine to be just and
necessary.

Dated:  July 31, 2018 /s/ Adrienne D. Gurley
ADRIENNE D. GURLEY
Attorney for Plaintiff
Securities and Exchange Commission

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ADRIENNE D. GURLEY  
Email:  [email protected] 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 
Michele Wein Layne, Regional Director 
John W. Berry, Associate Regional Director 
Amy Longo, Regional Trial Counsel 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 
 

vs. 

ROBERT LOZUK 

Defendant. 
 

 Case No. 
 
 
COMPLAINT 
 

 
 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

SUMMARY 

1. In July 2016, Robert Lozuk (“Lozuk”) engaged in insider trading in the 

securities of Sequenom, Inc. (“Sequenom”), a San Diego life sciences company that 

provides molecular diagnostic testing services, with an emphasis on noninvasive prenatal 

testing.  Lozuk, a high-level officer at Sequenom, breached a duty he owed to his 

employer when he knowingly provided his friend-tippee (“Individual A”) with material 

nonpublic information relating to Laboratory Corporation of American Holding’s 

(“LabCorp”) bid to acquire Sequenom through a tender offer.  Individual A then used the 

material nonpublic information to place illegal trades in Sequenom stock before the 

Case 3:18-cv-01765-LAB-BGS   Document 1   Filed 07/31/18   PageID.1   Page 1 of 7

jenniferm
Case Number



 

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public announcement of the acquisition.  

2. On July 21, 2016, less than a week before the merger announcement, 

Lozuk knowingly tipped Individual A, who was not a Sequenom employee, about the 

merger.  Lozuk knew that the information was material nonpublic information when he 

told Individual A.  On the basis of Lozuk’s tip, Individual A purchased $18,000 worth of 

Sequenom stock between July 22 and 25, 2016, at prices ranging from $0.86 to $0.88 per 

share.  

3. On July 27, 2016, LabCorp and Sequenom issued a joint press release 

announcing the merger agreement by which LabCorp would acquire all of the 

outstanding shares of Sequenom in a cash tender offer of $2.40 per share, or $371 

million.  That day, the price of Sequenom stock increased 176%.  Immediately following 

the announcement, Individual A sold all of his Sequenom shares, reaping ill-gotten gains 

of $26.643.80  

4. By engaging in the conduct described in this Complaint, Lozuk violated 

Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 

U.S.C. §§ 78j(b), 78n(e)] and Rules 10b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.10b-

5, 240.14e-3]. 

JURISDICTION AND VENUE 

5. The SEC brings this action pursuant to Sections 21(d), 21(e), and 21A of 

the Exchange Act to enjoin the acts, practices, and courses of business alleged in this 

Complaint, and to obtain civil money penalties, an order barring Lozuk from acting as an 

officer or director of a public company, and such other and further relief as the Court 

may deem just and appropriate [15 U.S.C. §§ 78u(d), 78u(e), and 78u-1]. 

6. The Court has jurisdiction over this action pursuant to Sections 21(d), 

21(e), 21A, and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 78u-1, and 

78aa(a)]. 

7. Defendant, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

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securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

8. Venue is proper in this district pursuant to Section 27(a) of the Exchange 

Act [15 U.S.C. § 78aa(a)] because certain of the transactions, acts, practices and courses 

of conduct constituting violations of the federal securities laws occurred within this 

district.  In addition, venue is proper in this district because Defendant Robert Lozuk 

resides in this district.  

THE DEFENDANT 

9. Robert Lozuk, age 39, lives in Carlsbad, California and between June 

2015 and October 2016 was the Senior Vice President of Commercial Operations at 

Sequenom, where he was employed since October 2012.   

RELEVANT ENTITIES AND INDIVIDUAL 

10. Sequenom, Inc. is a Delaware corporation headquartered in San Diego, 

California.  Sequenom is a life sciences company that provides molecular diagnostic 

testing services, with an emphasis on noninvasive prenatal testing.  Sequenom was 

acquired in a 2016 tender offer by LabCorp, and is now a wholly-owned subsidiary of 

LabCorp.  Sequenom’s common stock was formerly registered with the SEC pursuant to 

Section 12(b) of the Exchange Act, and was traded on the NASDAQ (ticker: SQNM).    

11. Laboratory Corporation of America Holdings, is a Delaware 

corporation headquartered in Burlington, North Carolina.  The common stock of 

LabCorp is registered with the SEC pursuant to Section 12(b) of the Exchange Act and is 

traded on the New York Stock Exchange (ticker: LH).   

12. Individual A is a childhood friend of Lozuk. 

FACTUAL ALLEGATIONS 

13. Sequenom is a life sciences company that provides molecular diagnostic 

testing services, with an emphasis on noninvasive prenatal testing.  On June 8, 2016, 

Sequenom’s board of directors instructed a large investment bank to contact LabCorp 

and a few other companies to assess their interest in acquiring Sequenom, which was 

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subject to a large amount of outstanding debt.  Sequenom engaged in due diligence and 

entered into negotiations with LabCorp, and on July 20, 2016, representatives of 

Sequenom and LabCorp agreed upon an acquisition price of $2.40 per share.   

14. At the time of the acquisition, Lozuk was the Senior Vice President of 

Commercial Operations at Sequenom, and a direct report to the CEO.  In addition to the 

duties imposed on Lozuk as an officer and director of Sequenom, Lozuk was also subject 

to Sequenom’s written policy, applicable to all Sequenom employees, preventing insider 

trading and its code of conduct.  Further, Lozuk had signed a confidentiality letter in 

October 2015 acknowledging his obligation not to disclose to anyone, including certain 

other co-workers, material nonpublic information regarding Sequenom’s efforts to 

address the company’s outstanding debt obligations.   Ultimately, the board of directors 

decided to seek an outside buyer.   By at least June 8, 2016, Lozuk became aware of the 

potential for an outside company to acquire Sequenom. 

15.   On July 21, 2016, Lozuk attended a concert with Individual A.  Having 

signed the October 2015 confidentiality letter, Lozuk knew that he owed a duty to 

Sequenom not to provide any material nonpublic information regarding the contemplated 

LabCorp-Sequenom deal to Individual A.  Nevertheless, while at the concert, Lozuk told 

Individual A that LabCorp was about to purchase Sequenom.   At the time of the tip, 

Sequenom’s shares were trading close to $1.  Individual A knew that Lozuk was 

providing this material nonpublic information in breach of a duty Lozuk owed to 

Sequenom.   

16. On July 27, 2016, the companies announced that LabCorp, through its 

wholly owned subsidiary Savoy Acquisition Corp., would acquire all of the outstanding 

shares of Sequenom in a cash tender offer for $2.40 per share, or $371 million including 

Sequenom’s net indebtedness.  After the announcement of the merger, Sequenom’s stock 

price increased 176% to $2.35 per share.  The total daily trading volume increased from 

363,087 on the day before the announcement to 40,718,435 on the day of the 

announcement – an increase of 11,214.5% in one trading day.   

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17. Immediately following the announcement of the LabCorp-Sequenom 

merger on July 27, 2016, Individual A sold all of his shares for a realized profit of 

$26,643.80.   

18. Lozuk tipped Individual A with information concerning the LabCorp 

acquisition that he knew, or was reckless in not knowing, was material and nonpublic.  

19. Lozuk knew, or was reckless in not knowing, that he owed a fiduciary duty 

and other duties of trust and confidence to Sequenom and its shareholders, to maintain 

the confidentiality of the material nonpublic information that he possessed in his 

capacity as a senior vice president and employee of Sequenom.  By providing Individual 

A with material nonpublic information, Lozuk breached the fiduciary duty and other 

duties of trust and confidence that he owed to Sequenom and its shareholders.  Either 

directly or indirectly, Lozuk gained, or expected to gain, a personal benefit from 

conveying to Individual A material nonpublic information in the form of a gift to a 

childhood friend.  

20. At the time Lozuk tipped Individual A, and at the time Individual A traded 

on the basis of material nonpublic information, LabCorp had taken a substantial step or 

steps to commence its tender offer for Sequenom.  

FIRST CLAIM FOR RELIEF 

Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

21. The SEC realleges and incorporates by reference paragraphs 1 through 20 

as though fully set forth herein. 

22. By engaging in the conduct described above, Lozuk, in connection with the 

purchase or sale of securities, directly or indirectly, by the use of the means or 

instrumentalities of interstate commerce, or of the mails, or of the facilities of a national 

securities exchange, with scienter: 

 (a) employed devices, schemes, or artifices to defraud; 

 (b) made untrue statements of material fact or omitted to state   

 material facts necessary in order to make the statements made, in  

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 the light of the circumstances under which they were made, not   

 misleading; and/or 

  (c) engaged in acts, practices, or courses of business which operated  

 or would operate as a fraud or deceit upon other persons,    

 including purchasers and sellers of securities.   

23. By engaging in the foregoing conduct, Lozuk violated Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

SECOND CLAIM FOR RELIEF 

Violation of Section 14(e) of the Exchange Act and Rule 14e-3 Thereunder  

24. The SEC re-alleges and incorporates by reference Paragraphs 1 through 20 

above as if they were fully set forth herein. 

25. By engaging in the conduct described above, Lozuk, prior to the public 

announcement of the tender offer, and after a substantial step or steps to commence the 

tender offer had been taken, while in possession of material information relating to the 

tender offer, which information he knew or had reason to know was nonpublic and had 

been acquired directly or indirectly from the offering company, the issuing company, or 

any officer, director, partner, employee, or other person acting on behalf of the offering 

or issuing company, purchased or caused to be purchased or sold or caused to be sold the 

securities sought or to be sought by such tender offer. 

26. By reason of the actions alleged herein, Lozuk violated and, unless 

restrained and enjoined, will continue to violate Section 14(e) of the Exchange Act [15 

U.S.C. § 78n(e)] and Rule 14e-3 thereunder [17 C.F.R. § 240.14e-3] 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue a judgment  permanently enjoining Lozuk, and his officers, agents, servants, 

employees and attorneys, and those persons in active concert or participation with any of 

them, who receive actual notice of the judgment by personal service or otherwise, and 

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each of them, from violating Sections 10(b) and 14(e) of the Exchange Act [15 U.S.C. 

§§ 78j(b), 78n(e)] and Rules 10b-5 and 14e-3 thereunder [17 C.F.R. §§ 240.10b-5, 

240.14e-3].  

II. 

Order Defendant to pay a civil penalty under Section 21A of the Exchange Act 

[15 U.S.C. § 78u-1]. 

III. 

Prohibit Lozuk, pursuant to Section 21(d)(2) of the Exchange Act [15 U.S.C. § 

78u(d)(2)] from acting as an officer or director of any issuer that has a class of securities 

registered pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is 

required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. § 

78o(d)] for a period of five years. 

IV. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of all 

orders and decrees that may be entered, or to entertain any suitable application or motion 

for additional relief within the jurisdiction of this Court. 

V. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

 

Dated:  July 31, 2018 /s/ Adrienne D. Gurley 
ADRIENNE D. GURLEY 
Attorney for Plaintiff 
Securities and Exchange Commission 

 
 

Case 3:18-cv-01765-LAB-BGS   Document 1   Filed 07/31/18   PageID.7   Page 7 of 7