U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21419 / February 22, 2010
SEC v. Suman, et al., 07-CV-6625 (WHP) (S.D.N.Y.)
Court Enters Summary Judgment against Insider Trading Defendants Shane Bashir Suman and Monie Rahman
The Securities and Exchange Commission announced today that on February 11, 2010, the United States District Court for the Southern District of New York entered summary judgment against defendants Shane Bashir Suman and Monie Rahman, two Canadian citizens the Commission had charged with insider trading in 2007.
The judgment permanently enjoins Suman and Rahman from further violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, and Section 17(a) of the Securities Act of 1933. It further orders Suman and Rahman to disgorge, jointly and severally, their ill-gotten gains of $1,039,440 plus prejudgment interest. Finally, the judgment imposes civil penalties of $2,000,000 against Suman of $1,000,000 against Rahman.
The Commission's complaint, filed on July 24, 2007, alleged that Suman and Rahman traded on material, nonpublic information involving MDS, Inc.'s impending tender offer for the shares of Molecular Devices Corp., then based in Sunnyvale, California, in late January 2007. The court found that Suman learned about secret merger negotiations through access he had to electronic data in his job as an information technology specialist at Ontario-based MDS. In particular, Suman was able to read the contents of confidential e-mails and other electronic data without detection. By January 23, 2007, Suman had learned enough to start conducting Internet searches for the internal corporate code name for the MDS-Molecular merger as well as for Molecular Devices itself. Shortly after running those searches, Suman called Rahman, who was then living in Utah, and spoke to her for an unusually long time.
Between Jan. 24 and Jan. 26, 2007, Suman and Rahman bought 12,000 Molecular shares and 900 Molecular call options. Some of these purchases were financed with a margin loan of approximately $200,000, and the couple previously did not have a position in Molecular securities. On Jan. 29, 2007, MDS and Molecular jointly announced the tender offer for Molecular's shares. The stock price immediately rose from almost $24 to roughly $35, generating trading profits to Rahman and Suman of more than $1 million.
See also: LR 20203 (July 24, 2007)