Wednesday, June 4, 2008
The SEC filed a civil action in the United States District Court for the Southern District of New York against Burr B. McKeehan and Joseph A. Fontanetta for engaging in unlawful insider trading in the securities of Animas Corporation ("Animas") before a December 16, 2005 merger announcement with Johnson & Johnson. Animas designed, manufactured and sold products and services for patients with insulin-requiring diabetes. Its common stock was traded on the NASDAQ National Market System until February 2006, when the merger with Johnson & Johnson became effective.
The complaint alleges that Fontanetta, the Chief Executive Officer a privately-held medical instrumentation company, tipped material nonpublic information about Animas' merger to McKeehan, a retired podiatrist, two days prior to the merger announcement. The complaint also alleges that Fontanetta either misappropriated or unlawfully received the material nonpublic information from a fellow board member at his company who was the husband of an Animas executive and privy to the merger negotiations. After receiving the information, the complaint alleges that McKeehan began purchasing Animas stock and purchased a total of 30,000 shares of Animas stock, and, as a result of his unlawful trading, McKeehan realized potential profits of $183,018.
Without admitting or denying the allegations of the complaint, McKeehan has consented to the entry of a final judgment, subject to the Court's approval, permanently enjoining him from violating the charged provisions, and ordering him to pay disgorgement of $183,018, plus prejudgment interest of $18,059, and a civil penalty of $183,018.