FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Charges Brothers with Insider Trading
On June 11, 2013, the Securities and Exchange Commission filed a civil injunctive action in the Northern District of Ohio against Andrew W. Jacobs ("A. Jacobs") and his brother Leslie J. Jacobs II ("L. Jacobs"). The Commission alleges that A. Jacobs provided L. Jacobs material non-public information about a pending tender offer for Chattem, Inc. securities. L. Jacobs then traded on the basis of the information he received from his brother.
According to the Commission's complaint, on December 21, 2009, Sanofi-Aventis ("Sanofi"), a French pharmaceutical company, announced its intent to make a tender offer for Chattem, a Tennessee-based distributor of over-the-counter pharmaceutical products, at the price of $93.50 per share ("Announcement"). Shares of Chattem closed 32.60% higher on the day of the Announcement than the prior trading day's close of $69.98 and volume increased more than 3,000% to 10.3 million shares.
The Commission alleges that A. Jacobs learned of the tender offer in a confidential conversation with his brother-in-law, who was at the time a Chattem executive. The executive, with whom A. Jacobs had been friends since business school and who was married to his wife's sister, requested that A. Jacobs keep their discussion confidential. A. Jacobs agreed to do so. Nonetheless, according to the complaint, the next day, A. Jacobs called his brother L. Jacobs A and told him that Chattem was going to be acquired. A few days later, L. Jacobs purchased 2000 shares of Chattem at a cost of $136,579.85. After the Announcement, L. Jacobs sold those shares for a profit of $49,457.21.
The Commission's complaint, filed in the United States District Court for the Northern District of Ohio, alleges that each defendant violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, and seeks against each defendant permanent injunctions, disgorgement with prejudgment interest and civil monetary penalties pursuant to Section 21A of the Exchange Act. The Commission also seeks an officer and director against A. Jacobs, who was a high-level executive of a public company at the time of the tip.
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC Charges Medlink International and Two Executives with Fraudulent Filing
The Securities and Exchange Commission today announced that it filed a civil injunctive action against MedLink International, Inc., its CEO, Aurelio Vuono, and its CFO, James Rose, accusing them of filing an annual report falsely stating that its audit had been completed and defrauding a MedLink investor. MedLink's principal office is in Hauppauge, New York, and it purports to be a healthcare information technology company. Vuono, age 46 and a recidivist securities law violator, resides in Huntington Station, New York. Rose, age 33, resides in Hauppauge, New York.
The Commission's complaint, filed October 24, 2012 in U.S. District Court in Brooklyn, New York, alleges that on April 25, 2011, MedLink filed with the Commission an annual report on Form 10-K for the year ended December 31, 2010. Included in the filing was an audit report with the electronic signature of MedLink's auditor, which stated that the auditor had conducted an audit of MedLink's financial statements for the years ended December 31, 2009 and 2010. The complaint alleges that the Form 10-K was false and misleading because the audit had not been completed, and the auditor had not authorized MedLink to include the audit report or to use its electronic signature. The complaint also alleges that the Form 10-K was false and misleading because it contained the electronic signature of MedLink's founder and director, even though the director had not reviewed it nor authorized use of his electronic signature.
The complaint further alleges that in approximately April 2011, a MedLink investor agreed to purchase 210,526 shares of MedLink stock for $149,473.50. Vuono promised the investor that MedLink would delay this purchase and not cash the investor's check until the investor had sufficient funds in his checking account. Shortly thereafter, the investor informed Vuono and Rose that MedLink was not authorized to cash the check and instructed MedLink to return it. Instead of returning the check, Rose deposited it in MedLink's bank account. Despite repeated requests, MedLink did not return the investor's money or issue any MedLink stock to the investor.
The Commission's complaint charges: MedLink, Vuono and Rose with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5; MedLink with violations of Section 15(d) of the Exchange Act and Rules 12b-20 and 15d-1; Vuono and Rose with violations of Exchange Act Rule 15d-14; and Vuono and Rose with aiding and abetting MedLink's violations of Section 17(a) of the Securities Act, Sections 10(b) and 15(d) of the Exchange Act and Rules10b-5, 12b-20 and 15d-1. The Commission is seeking against MedLink, Vuono and Rose permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest to be paid jointly and severally, and civil monetary penalties. The Commission is also seeking against Vuono and Rose officer and director and penny stock bars.
Posts
