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Nasty Wall St divorce battle ensnares biotech CEOs

Screen shot of Marc Beer on CNBC
Source: CNBC
Screen shot of Marc Beer on CNBC

A salacious Wall Street child custody and divorce battle has touched two biotech CEOs and appears to have initially moved their company stocks down despite vigorous denials regarding unsubstantiated claims of their illegal drug use.

Aegerion Pharmaceuticals boss Marc Beer and Seattle Genetics chief executive Clay Siegall were named in a New York court filing last week as part of a group of executives who partied using illegal drugs with Sage Kelly, head of health-care investment banking at Jefferies, a Leucadia National unit.

The full filing document started circulating Friday and appeared to help push Aegerion's stock down 7.76 percent. The stock recovered somewhat Monday and closed at $32, down 3.16 percent since Friday. Seattle Genetics' stock rose 0.98 percent Friday but fell 1.57 percent Monday. The Dow Jones Industrial Average gained both days. Both stocks moved higher by several percentage points Tuesday, recovering the losses since Friday.

Kelly's wife, Christina Di Mauro Kelly, filed the papers as part of a divorce proceeding in an attempt to regain custody of their two daughters and receive $7 million in damages. In the documents, she described her husband as the "ringleader" of a "drug cohort" of financial and corporate industry pros who mixed business with pleasure by partying in Manhattan, Las Vegas, the Hamptons and other moneyed locales.

"Ms. Kelly's accusations as to me are baseless and absurd. I have never used cocaine in my life. The allegations as to me are completely and unequivocally false," Siegall said in an email to CNBC.com.

Beer also denied the accounts of his behavior. "Marc categorically denies the allegations. I'm unable to comment further at this time," an Aegerion spokesman said in an email.

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Jo-Ellen Pozner, an assistant professor at the Haas School of Business who focuses on corporate governance and misconduct, said even if the allegations aren't true, the situation is a distraction for the companies, which is of legitimate concern for shareholders.

Pozner said it was smart of the CEOs to comment on the claims. But she added the boards should also make a statement on the issue or even launch an investigation.

"What you want to do is engender an impression on the part of external stakeholders that you have things in hand, that you understand the complexities involved, and that you have a plan for moving forward," Pozner said.

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Both companies did not comment on if there has been any action by their respective boards of directors; neither company had issued a press release on the matter as of Tuesday. They also declined to comment on if they would continue their investment banking relationship with Jefferies.

The filing alleges Kelly is unfit to be a father because of frequent illegal drug use and other debaucherous and erratic behavior—often together with his wife. Kelly called his spouse's claims a lie in a sealed court filing, according to media reports.

"The Wolf of Wall Street tale she tells this court is a work of fiction," the filing is reported to say. Lawyers for both Kellys did not respond to requests for comment

The filing also names a slew of other financial industry professionals, including two senior Jefferies bankers, as fellow hard-partying drug users in Kelly's group of friends. A spokesman for Jefferies declined to comment.

In 2010, Christina Kelly made news for crashing her car with her two children inside. She was charged with driving while intoxicated, a felony, and endangering the welfare of a child. Kelly pleaded guilty to two DWI charges (aggravated DWI with a child in the car and a regular DWI) and was sentenced to three years' probation, according to the Suffolk County District Attorney's office. According to the latest filing, she then promised not to drink or use illegal drugs and entered therapy.

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