The subject of insider dealing has featured heavily in the press in the United States over the past few months, with employees at a number of high profile financial organisations facing charges over alleged fraudulent activities.
However, it’s not only finance related companies that can be caught up in insider trading investigations. In a recent development, the US Securities and Exchange Commission (SEC) has brought charges in relation to insider dealing at a vitamin company.
The charges are against a former director of NBTY Inc and members of his family circle, and relate to alleged insider trading ahead of the company’s sale to a private equity firm.
The SEC alleges that board member, Glenn Cohen, learned that NBTY Inc was negotiating a sale to The Carlyle Group and passed confidential information to his three brothers and a brother’s girlfriend. They subsequently traded on the inside information provided and reaped illicit profits totalling $175,000.
The five individuals concerned have now apparently agreed to settle the SEC’s charges by paying a total of more than $500,000.
“As a board member at NBTY for more than 20 years, Glenn Cohen knew the importance of maintaining the confidentiality of company information,” said Amelia A. Cottrell, associate director in the SEC’s New York Regional Office. “Unfortunately, when presented with exclusive details about an impending sale, he breached his duty to NBTY shareholders in order to enrich his own family members.”
“Directors of public companies who abuse their access to confidential company information at shareholder expense must be held accountable,” she added.
According to the SEC, the parties have neither admitted nor denied the charges in the settlement, which is subject to court approval.
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This blog post is intended as a news item only - no connection between Lewis Nedas and the parties concerned is intended or implied.
