Monday, May 12, 2008
The SEC filed a civil action in the United States District Court for the Southern District of Florida charging three doctors, Dr. Zachariah P. Zachariah (Zachariah), Dr. Mammen P. Zachariah (M. Zachariah), and Dr. Sheldon Nassberg, with illegal insider trading from which they reaped a total of more than a half-million dollars in profits. All three defendants reside and practice medicine in the Ft. Lauderdale, Florida area.
The SEC alleges illegal trading in the shares of two unrelated companies. In the first, the complaint alleges that Zachariah, shortly after being appointed to serve as a company director, learned that IVAX's then-chairman and CEO had agreed with the then-CEO of Teva Pharmaceuticals Ltd. on preliminary terms for Teva to acquire IVAX and placed the first of four separate IVAX stock purchase orders that he made in his online brokerage account that day. Zachariah purchased 35,000 shares of IVAX stock at a cost of approximately $730,000. The SEC further alleges that Zachariah later tipped his brother, M. Zachariah, who purchased 2,000 shares of IVAX stock at a total cost of approximately $46,000 on the last trading day before IVAX announced on July 25, 2005 that Teva would acquire it.
In addition, according to the SEC's complaint, Zachariah also misappropriated material, non-public information about Sarasota, Fla.-based Correctional Services Corporation, which operated correctional and detention facilities. The SEC's complaint alleges that from May through July 2005, Zachariah bought over $200,000 worth of Correctional shares and his brother and close friend, Nassberg, each made multiple purchases of Correctional stock in the week leading up to a public announcement on July 14, 2005, by The GEO Group, Inc., that it would acquire Correctional. Zachariah was a GEO consultant. The complaint seeks a judgment against all defendants providing for injunctions, disgorgement of their ill-gotten gains with prejudgment interest, and civil money penalties. The complaint also seeks an order prohibiting Zachariah from serving as an officer or director of a public company.