Source- http://www.sec.gov/news/press/2011/2011-9.htm
Washington, D.C., Jan. 13, 2011 — The Securities and Exchange Commission today charged the former Chairman of the Board at Home Diagnostics Inc. with illegally tipping friends and business associates with inside information about an impending acquisition of the company.
The SEC alleges that George H. Holley, who co-founded Home Diagnostics, provided his personal accountant Steven Dudas and his friend and business associate Phairot Iamnaita with confidential information about the company's upcoming acquisition by Nipro Corporation. Holley then gave Dudas $121,500, which Dudas and Iamnaita used to purchase Home Diagnostics stock in a joint brokerage account. After the acquisition was publicly announced, Dudas and Iamnaita tendered their shares for an illicit profit of approximately $90,120. Dudas and Iamnaita are charged along with Holley in the SEC's complaint filed today in federal district court in Trenton, N.J.
"Holley breached the fiduciary duty he owes to the company he co-founded and its shareholders by exploiting confidential board room information to enrich his friends and business associates," said Antonia Chion, Associate Director of the SEC's Division of Enforcement.
The SEC alleges that in addition to tipping Dudas and Iamnaita between December 2009 and Jan. 13, 2010, Holley illegally provided two other friends, a relative, and a business associate with inside information about Home Diagnostics's imminent acquisition. Holley provided at least two of these individuals with a cover story, giving them copies of analyst reports and telling them that they should use the reports to justify their illicit trading. All four of these individuals purchased Home Diagnostics stock on the basis of Holley's tips for combined profits of more than $170,000.
The SEC's complaint charges Holley, Dudas, and Iamnaita with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the general antifraud provisions of the federal securities laws, and Section 14(e) of the Exchange Act and Rule 14e-3 thereunder, the tender offer fraud provisions. The Commission seeks permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the imposition of monetary penalties against all defendants. The SEC also seeks to permanently prohibit Holley from acting as an officer or director of a public company pursuant to Section 21(d)(2) of the Exchange Act.
The SEC thanks the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, FINRA, and the Securities and Exchange Commission of Thailand for their cooperation and assistance in this matter.
"Holley breached the fiduciary duty he owes to the company he co-founded and its shareholders by exploiting confidential board room information to enrich his friends and business associates," said Antonia Chion, Associate Director of the SEC's Division of Enforcement.
The SEC alleges that in addition to tipping Dudas and Iamnaita between December 2009 and Jan. 13, 2010, Holley illegally provided two other friends, a relative, and a business associate with inside information about Home Diagnostics's imminent acquisition. Holley provided at least two of these individuals with a cover story, giving them copies of analyst reports and telling them that they should use the reports to justify their illicit trading. All four of these individuals purchased Home Diagnostics stock on the basis of Holley's tips for combined profits of more than $170,000.
The SEC's complaint charges Holley, Dudas, and Iamnaita with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the general antifraud provisions of the federal securities laws, and Section 14(e) of the Exchange Act and Rule 14e-3 thereunder, the tender offer fraud provisions. The Commission seeks permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the imposition of monetary penalties against all defendants. The SEC also seeks to permanently prohibit Holley from acting as an officer or director of a public company pursuant to Section 21(d)(2) of the Exchange Act.
The SEC thanks the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, FINRA, and the Securities and Exchange Commission of Thailand for their cooperation and assistance in this matter.
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