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A former biopharmaceutical executive has agreed to pay nearly $156,000 to resolve U.S. Securities and Exchange Commission (SEC) allegations that he engaged in insider trading by purchasing shares of Cleveland BioLabs Inc. and its shareholder, Immune Therapeutics, before the announcement of a merger deal.

In a ruling issued Thursday by a Florida federal court, U.S. District Judge T. Kent Wetherell II ordered Curt L. Dewitz, 52, to pay a civil penalty of over $70,000, which matches the profits he allegedly gained from the illegal trading activity. Dewitz is also required to pay $15,000 in prejudgment interest, according to the court’s order.

While Dewitz did not admit or deny the SEC’s allegations, he consented to the judgment. The SEC had accused Dewitz of improperly trading shares of Cleveland BioLabs and Immune Therapeutics in advance of the October 2020 announcement that Cytocom Inc. planned to acquire Cleveland BioLabs through a reverse merger.

The SEC claimed that Dewitz made multiple stock purchases in Cleveland BioLabs over several months leading up to the announcement, using multiple trading accounts. He also bought Immune Therapeutics shares the day before the merger news broke. The SEC noted that the acquisition deal was favorable to Immune Therapeutics.

Florida-based Immune Therapeutics, now known as Biostax Corp., was described by the SEC as a developer of immunotherapies targeting protexopioid-related conditions. The SEC emphasized that the company traded on an over-the-counter market and had been previously linked to Cytocom, which was formed in 2014 as a subsidiary of Immune Therapeutics.

According to the SEC, Dewitz joined Cytocom as director of business development in April 2020, where he was tasked with finding a suitable public company for Cytocom to merge with. Dewitz reportedly identified Cleveland BioLabs as a potential target because of its drug development for acute radiation syndrome, which aligned with Cytocom’s research.

As talks progressed, the SEC said Dewitz maintained close communication with Cytocom’s CEO, sometimes having daily phone calls, and even inquired whether it was appropriate to trade Cleveland BioLabs’ shares. The CEO allegedly advised Dewitz not to trade ahead of the merger announcement, a warning Dewitz reportedly ignored, continuing to buy shares in both companies.

The SEC claimed that Dewitz used several trading accounts, including those in his wife’s name, to make the purchases, which took place as the merger talks advanced. Following the announcement of the merger, Cleveland BioLabs' stock price surged by 46%, resulting in Dewitz's alleged illegal gains.

Dewitz's legal team has yet to respond to requests for comment, while the SEC declined to provide further details beyond its public filings.