U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21644 / September 10, 2010
Securities and Exchange Commission v. Dr. Bobby V. Khan, Civil Case No. 1:10-cv-2865 (N.D. Ga.)
SEC CHARGES GEORGIA CARDIOLOGIST WITH INSIDER TRADING
On September 9, 2010, the Securities and Exchange Commission ("Commission") filed a civil action in the U.S. District Court for the Northern District of Georgia charging Dr. Bobby V. Khan, a Georgia cardiologist, with insider trading in the stock of a Georgia-based pharmaceutical company, just days before the announcement of a tender offer for the purchase of all the shares of that company.
The Commission's complaint alleges that Defendant Khan acquired material nonpublic information regarding the acquisition of Sciele Pharma, Inc. ("Sciele") by Japanese pharmaceutical company Shionogi & Co., Ltd. ("Shionogi") from a long time business associate and friend, who was then an officer of Sciele. Following his receipt of this information, Khan opened an online brokerage account, his first since 2003. Khan then transferred approximately one-third of his then-liquid net worth into that account and purchased a combined total of 4,000 shares of Sciele stock, days before Shionogi's public announcement of its tender offer for Sciele shares on Labor Day, September 1, 2008. Following the tender offer announcement, Khan sold all of his Sciele shares in October 2008, realizing substantial profits and returns in less than two months.
The Commission charges Khan with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The Commission seeks an order permanently enjoining Khan from future violations of these provisions of the securities laws, ordering the disgorgement of Khan's ill-gotten gains obtained through his misconduct, plus pre-judgment interest thereon, and ordering the payment of civil monetary penalties. The Commission appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.
See Also: SEC Complaint