U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21347 / December 23, 2009
Securities and Exchange Commission v. Nicolas Patrick Benoit Condroyer and Gilles Robert Roger, Civil Action No. 1:09-cv-3600 (N.D. GA)
SECURITIES AND EXCHANGE COMMISSION OBTAINS EMERGENCY ASSET FREEZE AGAINST PURCHASERS OF CALL OPTIONS FOR CHATTEM, INC. PRIOR TO ACQUISITION ANNOUNCEMENT
Orders Placed Just Days Prior to $1.9 Billion Acquisition Announcement; $4.2 Million Now Frozen
On December 22nd , 2009 the Honorable Charles A. Pannell, Jr., U.S. District Judge for the Northern District of Georgia, entered a Temporary Restraining Order freezing assets of Nicolas Patrick Benoit Condroyer and Gilles Robert Roger, both of whom are citizens of France and reside in Brussels, Belgium. The Commission's complaint alleges that Condroyer and Roger engaged in illegal insider trading, in violation of the antifraud provisions of the federal securities laws. In addition to freezing approximately $4.2 million in assets, the Court's order: (i) provides for expedited discovery, and (ii) prohibits the defendants from destroying evidence.
On December 21, 2009, Chattem, Inc., a company based in Chattanooga, Tennessee, announced that it had entered into a definitive agreement to be acquired by Sanofi-Aventis, a health care company located in France. Chattem manufactures and markets an array of the over-the-counter healthcare products and its shares are traded on the New York Stock Exchange. Under the acquisition agreement, Sanofi agreed to pay $1.9 billion for 100% of Chattem's outstanding shares, at a share price of $93.50 per share. According to the complaint, the acquisition share price represents a 32.6% premium above the closing price of $69.98 on the prior trading day, Friday, December 18th.
The Commission further alleges that between December 7 and December 18, 2009, Condroyer, while in possession of material, nonpublic information regarding this acquisition, purchased over 1,900 "out-of-the-money" call option contracts for Chattem stock in a newly-opened account at an options brokerage firm in the United States. Substantially all of those contracts were set to expire on January 15, 2010, within weeks of the purchase date.
The Commission similarly alleges that on December 17 and December 18, 2009, Roger, while in possession of material, nonpublic information regarding this acquisition, purchased 940 "out-of-the-money" call option contracts for Chattem in an account at an options brokerage firm in the United States. According to the complaint, Roger had only opened this account on December 14, 2009. All of the call option contracts purchased by Roger were set to expire on January 15, 2010, within weeks of the purchase date, according to the complaint.
The complaint further alleges that, on December 21, 2009, after the acquisition was announced, Condroyer and Roger sold all of their call option contracts, generating illicit profits of approximately $2.8 million for Condroyer and $1.4 million for Roger. Since the accounts were opened, the complaint alleges that there have been no transactions in either account other than the purchase and sale of Chattem call options.
The Commission alleges that Condroyer and Roger violated of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the Commission is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest thereon, and civil monetary penalties.
