Insider Trading Headlines: Principal of Wynnefield Capital Now On Trial, Ex-Vitamin Company Board Member Settles His Case, and Clinical Drug Trial Doctors Face Charges Related to New Cancer Drug

Wynnefield Capital Inc. Principal On Trial in SEC Insider Trading Case
Nelson Obus, the principal of Wynnefield Capital Inc., is accused of engaging in insider trading to make his hedge fund $1.3 million. The U.S. Securities and Exchange Commission says that he confessed twice that he received a tip that SunSource Inc. was going to be put up for sale. One of the confessions was purportedly to the CEO of SunSource.

In 2001, SunSource announced it was going to be bought by Allied Capital Corp. It’s stock price then doubled. Obus, who had purchased stock in the company, made $1.3 million.

The regulator is also suing ex-GE capital undewriter Brad Strickland and Peter Black, an ex-analyst for Winnyefield. The agency believes Strickland gave Black the tip. The latter then sent the information to Obus. They’ve denied any wrongdoing.

The insider trading case, which the SEC brought in 2006, was initially thrown out by US District Judge George Daniels. A federal appeals court revived the securities case in 2012. Now, Judge Daniels is once again presiding over the case.

The Commission wants to ban the defendants from working as public company directors and officers. It is also seeking penalties.

Ex-NBTY Inc. Board Member and Relatives Settles Insider Trading Charges for Over $500,000
Glenn Cohen, a board member of vitamin company NBTY Inc., has settled SEC charges accusing him of insider trading along with other family members. According to the Commission, Cohen gave his three brothers, Craig Cohen, Steven Cohen, and Marc Cohen, and Laurie Topal the confidential data that NBTY Inc. was working on the terms of its sale by The Carlyle Group. They made illicit profits of $175,000 and are settling for over $500,000.

Aside from the financial penalties, Glenn Cohen is barred from taking on the role of director or officer in a public company. By settling, the Cohens and Topal are not denying or admitting to the SEC charges.

Clinical Trial Doctors Involved In Testing of New Cancer Drug Are Accused of Insider Trading
Dr. Franklin M. Chu and Dr. Daniel J. Lam are now facing insider trading charges accusing them of illegally trading on the knowledge that the Food and Drug Administration had stopped clinical trials of Capesaris, the prostate cancer drug that GTx Inc. was developing. The SEC believes that when the share price dropped by more than 36%, doctors avoided substantial losses because they’d sold their stocks in GTx.

Lam and Chu have agreed to settle the SEC charges, which also accuse them of making over $45,000 in illicit profits. They will collectively pay $116,864.

SEC Charges Two Clinical Drug Trial Doctors With Insider Trading,, May 19, 2014

Read the SEC Complaint Against the Cohens and Topal (PDF)

Wynnefield’s Obus Traded on Inside Tip, SEC Says in Trial, Bloomberg/Businessweek, May 20, 2014

More Blog Posts:
Insider Trading Roundup: Lawson Software Founders Pay $5.8M to Settle SEC Allegations, Three Sales Managers Face SEC Charges, and Kentucky Mayor Will Turn Over Illicit Profits, Stockbroker Fraud Blog, May 16, 2014

Former Morgan Stanley Broker and Two Others Allegedly Ran $5.6M Insider Trading Scam, Swallowed The Information, Stockbroker Fraud Blog, March 19, 2014
FBI Probes Possible High-Speed Trading, Insider Trading Link, Institutional Investor Securities Blog, April 1, 2014

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