U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19037 / January 18, 2005
SEC V. CHARLES E. JANNETTI AND KEVIN DEBBS, 05 Civ. 308 (SRC) (D.N.J.)
CHARLES JANNETTI AND KEVIN DEBBS SETTLE INSIDER TRADING CHARGES
The United States Securities and Exchange Commission ("Commission") announced today that on January 13, 2005 it filed a complaint in the United States District Court for the District of New Jersey alleging illegal insider trading by Charles Jannetti, 56, of Howell, New Jersey, and Kevin Debbs, 40, of Atlantic Highlands, New Jersey, former employees of Osteotech, Inc. ("Osteotech"). The Commission's complaint alleges that Jannetti and Debbs violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder when they sold shares of Osteotech while in possession of material, nonpublic information.
Specifically, the Commission's complaint alleges that that on September 26 and 27, 2002, Jannetti and Debbs learned about contamination problems at Osteotech's production facilities. While in possession of this material, nonpublic information, Debbs and Jannetti sold their entire positions in Osteotech stock, illegally avoiding the losses they would have incurred had the information been public. On September 30, 2002, once Osteotech disclosed the contamination problems and the resulting shut down of its last remaining production facility, Osteotech's stock price fell from $9.47 per share on the previous day to $5.16 per share. Accordingly, Jannetti and Debbs avoided losses of $9,040 and $12,920 by selling when they did.
Jannetti and Debbs have agreed to a resolution of this matter, subject to the Court's approval. Without admitting or denying any of the factual allegations contained in the Commission's complaint, both defendants have consented to the relief sought in the Commission's complaint: (i) injunctions barring each of them from future violations of Section 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (ii) disgorgement of losses avoided, plus prejudgment interest; and (iii) a one time civil penalty in an amount equal to the disgorgement amount. In his consent, Jannetti agreed to pay $18,564.01, comprised of $9,040 in disgorgement of avoided losses, plus $484.01 in prejudgment interest, and a civil penalty in the amount of $9,040. In his consent, Debbs agreed to pay $26,759.51, comprised of $12,920 in disgorgement of his avoided losses, plus $919.51 in prejudgment interest, and a civil penalty in the amount of $12,920.
The Commission acknowledges the assistance of the NASD in this investigation.