Thursday, 24 July 2014
Last updated 4 min ago
Feb 9 2007 | 11:16am ET
An unscrupulous family and its friends are proving that insider trading is not just carried out by two drinking buddies in the corner of a local watering hole. The Securities and Exchange Commission has filed civil actions in federal district court in New York involving an alleged insider-trading scheme, which generated more than $3.7 million in profits over a five-year period.
Zvi Rosenthal, a vice president at Taro Pharmaceuticals, allegedly stole material, nonpublic information concerning earnings results and pending generic drug approvals by the Food and Drug Administration. He then traded on the information and passed it on to his family members who then traded in Taro stock and options. Rosenthal’s son, Amir, took the illegal hand-me-downs from his dad and traded on the information in personal accounts he controlled, and in the account of the family-owned and controlled hedge fund, Aragon Partners.
Not wanting to hoard his newly-found good fortune, Amir also gave his brothers, Oren and Ayal; his father-in-law, Bahram Delshad; his best friend, David Heyman; and even his work supervisor, Young Kim, with the insider information.
After looting information from Taro, Ayal and Heyman decided to step it up a notch by stealing nonpublic information concerning impending mergers from their respective employers, PricewaterhouseCoopers and Ernst & Young. He then leaked the information to Amir.
The SEC is seeking permanent injunctive relief, disgorgement of all illegal profits and losses plus prejudgment interest and the imposition of civil monetary penalties against the defendants. The complaint also seeks an officer and director bar against Zvi Rosenthal.
Kim, for his efforts, has settled the insider trading charges against him and has agreed to pay over $4,000 in disgorgement of his ill-gotten gains plus prejudgment interest, and over $41,000 in penalties.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…