U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16198 / June 29, 1999
SECURITIES AND EXCHANGE COMMISSION v. RAYMOND G. KOLTS, Civil Action No. CV 99-06353 ER (RZx) (C.D. Cal.)
SECURITIES AND EXCHANGE COMMISSION SUES ATTORNEY FOR INSIDER TRADING IN TRIMEDYNE STOCK
The Securities and Exchange Commission ("Commission") announced today that it filed an insider trading case against an attorney who formerly represented Trimedyne, Inc., an Irvine, California, firm that designs medical laser systems.
The complaint alleges that attorney Raymond G. Kolts, age 48, of Glendale, California, and a principal in the Pasadena law firm of Kolts & Nawa, had been retained by Trimedyne to represent it in product liability lawsuit. In the course of that representation, Kolts learned from a Trimedyne employee that the Food and Drug Administration ("FDA") had cleared the company to market a medical laser (the "Urolase") for the treatment of prostate enlargement. Kolts also learned that this development had not been publicly announced. After learning of the FDA clearance and the planned announcement, Kolts purchased 2,500 shares of Trimedyne stock.
One week later, Trimedyne publicly announced the FDA clearance. On the day of Trimedyne’s public announcement of the FDA clearance, the price and volume of Trimedyne’s stock rose from approximately 50,000 shares and a high price of $3 1/2 per share on the day prior to the public announcement to a trading volume of approximately 5.5 million Trimedyne shares, nearly 59% of Trimedyne’s total outstanding stock, and a high price of $10 1/2 per share on the day of the announcement. The day after the announcement, approximately 18 million Trimedyne shares traded at a high of $16 1/4 per share. Kolts sold all the Trimedyne shares he had purchased just a few days earlier, earning a profit of $30,187.50.
The Complaint alleges that Kolts violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the Commission seeks a permanent injunction against Kolts to prevent future violations, order digorgement of profits and impose civil penalties.
The Commission acknowledges the assistance provided by NASDR Inc.http://www.sec.gov/litigation/litreleases/lr16198.htm