Insider Trading: Two Former Executives Accused of Making Illegal Profits from Emeritus Stock Trading Settle SEC Charges, More Final Judgments Reached Against Circle of Amateur Golfers, and Investment Adviser Gets Six Months in Prison
Medical Products Executives Settle Insider Trading Charges
The US Securities and Exchange Commission announced that insider trading settlements have been reached with two ex-In Home Medical Solutions LLC officers, who are also board members. Todd M. Lavelle and Ara Chackerian are accused of illegally trading in Emeritus Corp. based on inside information.
The regulator contends that LaVelle and Chackerian purchased Emeritus securities after learning about the upcoming merger between the company and Brookdale Senior Living Inc. However, they did this before the deal was disclosed to the public. On the day of the announcement of the merger, they sold their Emeritus shares, allegedly making more than $25K and $157K, respectively, in illegal profits.
LaVelle, who is settling the case but without denying or admitting to the allegations, will pay over $25K in disgorgement, more than $2,600 in prejudgment interest, and an over $25K civil penalty. Chackerian, who is also settling without denying or admitting to the findings, will pay over $157K of disgorgement, the same amount as a civil penalty, and more than $18,600 of prejudgment interest.
District Court Enters Remaining Final Judgments in Insider Trading Case Against Amateur Golfers
In the U.S. District Court for the District of Massachusetts, final judgments were entered in the SEC’s case against Eric McPhail and Jamie Meadows. The regulator accused them and others of insider trading in American Superconductor Corp. stock. Final judgments were previously issued against the other defendants.
The Commission claims that McPhail, on more than one occasion, gave non-public information about American Superconductor to several of his friends, with Meadows being one of them. McPhail received his information from a fellow country club member who was an American Superconductor executive. The information that the latter disclosed included expected earnings and other yet-to-come developments. The executive shared the information with McPhail but with the understanding that he would keep the details to himself.
Instead, McPhail and his friends improperly traded because of the insider iformation, making over $554K illegally. In a parallel criminal case, McPhail was sentenced to 18 months in prison and two years’ supervised release. As for Meadows, he has agreed to pay over $191K of disgorgement, more than $41,800 of prejudgment interest, and an over $191,500 civil penalty in the SEC’s case.
New York Investment Adviser Who Pleaded Guilty to Insider Trading Gets Six Months
Former investment adviser Tibor Klein is sentenced to six months in prison for insider trading. Klein pleaded guilty to one count of conspiracy to commit securities fraud.
Klein, who founded Klein Financial Services, engaged in insider trading related to Pfizer Inc.’s acquisition of King Pharmaceuticals Inc. for $3.6B several years back. Prosecutors said that he found out about the acquisition from former Hunton & Williams partner Robert Schulman, who was legal counsel for King Pharmaceuticals.
Klein bought shares in King for himself, Schulman, and clients. He also told broker Michael Shechtman about the acquisition. Over $40OK in illegal profits was generated.
In addition to prison time, Klein will have to serve six months under house arrest and complete 250 hours of community service. Klein must pay a $20K fine and forfeit over $37K.
Meantime, Schulman has been convicted of insider trading. Shechtman, an ex-Ameriprise (AMP) broker, pleaded guilty to conspiracy but has yet to be sentenced.
The SSEK Partners Group is an investment fraud law firm.
SEC Charges Former Medical Products Executives with Insider Trading, SEC, February 12, 2018
Court Enters Judgments Against Remaining Defendants in SEC Insider Trading Case Involving Massachusetts-Based Group of Amateur Golfers, SEC, February 20, 2018
U.S. investment adviser gets prison for insider trading on Pfizer-King deal, Reuters, February 12, 2018
More Blog Posts from SSEK Law Firm:
Barclays Faces New Criminal Fraud Charge Over $3B Qatar Loan, Institutional Investor Securities Blog, February 15, 2018
Two Former Morgan Stanley Investment Advisers Accused of Fraud Plead Guilty, Stockbroker Fraud Blog, January 31, 2018