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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23766 / March 3, 2017

Securities and Exchange Commission v. Thomas D. Melvin, Jr., et al., No. 12-civ-02984-CAP (N.D. Ga. filed Aug. 28, 2012)

SEC Obtains Split Jury Verdict in Insider Trading Case

On February 17, 2017, following a week-long trial in U.S. District Court for the Northern District of Georgia, a jury found a Milner, Georgia resident liable for insider trading concerning an upcoming merger between Sanofi-Aventis SA, a French Pharmaceutical company, and Chattem, Inc. a Chattanooga, Tennessee-based manufacturer of products such as Icy Hot and Gold Bond. A second defendant - a resident of Griffing, Georgia - was found not liable.

The SEC charged the two men - Peter Doffing and Joel Jinks - in 2012 along with six others, alleging that they were involved in an insider trading ring that generated more than $500,000 in illegal profits based on nonpublic information about the Sanofi-Aventis/Chattem merger. The SEC alleged that in November 2009, a board member of Chattem consulted his personal accountant in confidence about the tax consequences of the impending merger on his Chattem stock options. According to the SEC, the accountant then tipped a broker in Griffin, Georgia about the merger, who, in turn, tipped Doffing. Doffing, the jury concluded, bought Chattem stock and options shortly before the merger was announced, making about $500,000 in profit. Jinks, who also bought Chattem stock shortly before the merger was announced and made about $25,000 in profits when the merger was announced, was found not liable.

Aside from Doffing and Jinks, the SEC has charged 10 other individuals with insider trading concerning the Sanofi-Aventis/Chattem merger. The SEC obtained settlements with six of the charged individuals that resided in the United States totaling more than $390,000 in monetary sanctions. The SEC obtained jury verdicts against two of the charged individuals in March 2014. And, in December 2009, the SEC obtained an order freezing over $4 million in trading profits generated by two French citizens residing in Belgium.

The U.S. Attorney's Office for the Northern District of Georgia charged criminally - and obtained guilty pleas from - four of the 12 individuals charged by the SEC.

The court will decide sanctions against Doffing at a later date. The SEC's complaint seeks permanent injunctions, disgorgement of ill-gotten gains together with prejudgment interest, and civil penalties.

 

https://www.sec.gov/litigation/litreleases/2017/lr23766.htm


Modified: 03/03/2017