U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16199 / June 29, 1999
SECURITIES AND EXCHANGE COMMISSION v. MICHELLE NGUYEN, LISA NGUYEN and HAO VU, Civil Action No. SACV 99-830 AHS (ANx) (C.D. Cal.)
SECURITIES AND EXCHANGE COMMISSION SUES FORMER CONTROLLER OF TRIMEDYNE FOR INSIDER TRADING
The Securities and Exchange Commission announced today that it filed an insider trading case against Michelle Nguyen, the former controller of Trimedyne, Inc., and two family members who received stock tips from her. The action was filed in federal court in Los Angeles.
The complaint alleges that the three defendants purchased Trimedyne stock based upon nonpublic information about an action taken by the Food and Drug Administration ("FDA"). In March 1996, the FDA cleared Trimedyne to market a medical laser (the "Urolase") for the treatment of prostate enlargement. One week later, Trimedyne publicly announced that 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.
Michelle Nguyen ("Nguyen"), age 39, of Orange, California, was Trimedyne’s controller, and in that capacity, learned that the company had received notice from the FDA that the clearance to market the Urolase was "imminent." After learning that FDA clearance was imminent, Nguyen purchased 1,000 shares of Trimedyne stock. One day after the company received the FDA clearance, but prior to any public announcement of the development, Nguyen purchased an additional 1,100 shares of Trimedyne stock in her daughter’s account. Nguyen purchased an additional 2,000 shares of Trimedyne stock in her own account in the week prior to the company’s public announcement of the FDA clearance.
In addition to trading on her own behalf, Nguyen tipped her sister and brother about the FDA clearance. On the same day Nguyen made her second purchase of Trimedyne stock, her sister, Lisa Nguyen ("L. Nguyen"), age 33, of Tustin, California, purchased 4,966 shares of Trimedyne stock in four different accounts, and her brother, Hao Vu ("Vu"), age 48, of Lake Forest, California, purchased 4,000 shares of Trimedyne stock. After the announcement, Nguyen, L. Nguyen and Vu sold all of their shares of Trimedyne stock, making a combined profit of $82,967.87.
The Complaint alleges that Nguyen, L. Nguyen and Vu violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the Commission seeks a permanent injunction against each defendant against future such violations, digorgement of profits, prejudgment interest and civil penalties.
The Commission acknowledges the assistance provided by NASDR Inc.http://www.sec.gov/litigation/litreleases/lr16199.htm