ASIC yesterday announced that it is seeking civil claims against little-known biotech executive Dr Martin Soust of Malvern, Victoria. Dr Soust is accused of creating “an artificial price for trading in Select Vaccines” and creating “a false and misleading market regarding the price for trading in Select Vaccine shares in breach of s1041B of the Corporations Act.”

ASIC alleges that on 31 December 2007, Soust instructed his stockbroker to purchase shares in Select Vaccines (of which he was the managing director) in his mother’s name for the price of $0.025 (above its prevailing share price of $0.02) in an attempt to secure a performance bonus.

But while ASIC prosecutes Soust for an alleged crime that reaped him no benefit, other executives continue to chuckle all the way to the bank. Former MFS boss, Michael King, was paid a cash bonus of $1.6 million during 2007 (in addition to his base salary of $800,000) — MFS (now called Octaviar) collapsed less than a year later and is now in the hands of the administrators.

Meanwhile, former Babcock & Brown CEO, Phil Green, seized more than $36 million in cash bonuses from a complicit board since 2005, while Babcock shares dropped by 99%. Former Allco boss David Coe received $17 million when his company, Allco, purchased another company which he owned a significant stake in (Rubicon). The purchase led to the collapse of Allco months later.

In addition to attracting some unwanted attention from ASIC, poor Soust hasn’t done too well out of his investment. With Soust allegedly paying $0.025 cents per share of Select Vaccines, his stake (or more correctly, his mother’s stake) has since fallen by around 75%. Meanwhile, Soust’s personal holding of 798,000 Select shares (as reported on 31 August 2008) is worth a tad over $4800, based on the company’s most recent share price.

Sadly for Soust, the alleged scheme did not appear to achieve its intended goals, with Select’s 2007 remuneration report indicating that Soust received base pay of $255,000, but no bonus payment (with the alleged point of the purchase being to increase the price of Select shares such that a performance bonus would be crystallised). Soust later resigned on 31 August 2008, due to “personal and family reasons”, with Chairman Robin Beaumont noting that “it was important to recognise the role Dr Soust had played in helping form and shape Select Vaccines.”

But Soust’s biggest mistake was not necessarily allegedly manipulating Select’s share price — he may have simply been working for the wrong company.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey