March 2, 2006
Former Associate GC Sued for Insider Trading by SEC
The SEC filed a civil insider trading action against Mitchell Drucker, the former associate general counsel at NBTY Inc., a nutritional supplement company, for insider trading and tipping his father before the announcement of bad news at the company. According to the SEC's Litigation Release (here):
The Commission's Complaint, filed in the United States District Court for the Southern District of New York, alleges that on October 18, 2001, M. Drucker directed the sale of his entire holdings of NBTY stock, consisting of 25,700 shares, after learning material, non-public information that NBTY's fourth quarter earnings per share ("EPS") would be about 50 percent lower than analysts' expectations. The day after M. Drucker's sales, NBTY publicly announced, through a press release, that its fourth quarter EPS would be significantly lower than analysts' expectations. On the next trading day following the issuance of the press release, the price of NBTY shares fell by 27%, or $2.69.
The SEC calculates that Drucker's loss avoided was $138,174, his father's was $51,116, and the account of a friend who Drucker directed to sell shares avoided losing $7,953. (ph)
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