SEC Charges Former Medical Products Executives with Insider Trading
Litigation Release No. 24044 / February 12, 2018
Securities and Exchange Commission v. Todd M. LaVelle, No. 18-civ- 3:18-cv-00226-HES-MCR (Feb. 8, 2018)
Feb. 12, 2018 - Two former executives of a medical products distributor have agreed to settle charges that they illegally traded on inside information in the securities of Emeritus Corp.
According to the Securities and Exchange Commission, Todd M. LaVelle, the former chief executive officer and a board member of In Home Medical Solutions, LLC (IHMS) and Ara Chackerian, a former officer and board member of IHMS, both learned of an impending merger between Emeritus and Brookdale Senior Living Inc. from IHMS' Chief Operating Officer. The merger potentially had significant business implications for IHMS because a subsidiary of Emeritus was IHMS' largest customer. Before the merger was publicly announced, LaVelle and Chackerian bought Emeritus securities and each sold them for illegal profits of over $25,000 and $157,000, respectively, the day after the merger announcement.
The SEC's complaint against LaVelle, filed on February 8, 2018, in the U.S. District Court for the Middle District of Florida, charges him with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the SEC's complaint, LaVelle agreed to the entry of a final judgment that permanently enjoins him from violating the charged provisions of the federal securities laws and orders him to pay $25,342.40 in disgorgement, $2,629.81 in prejudgment interest, and a civil penalty of $25,342.40. The settlement is pending court approval.
The SEC's order against Chackerian finds that he violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's findings, Chackerian consented to a cease-and-desist order and agreed to pay disgorgement of $157,207.80, prejudgment interest of $18,635.55, and a civil penalty of $157,207.80.
The SEC's investigation was conducted by Greg Hillson and Jason Litow and supervised by Antonia Chion and Yuri B. Zelinsky. Daniel Maher provided litigation advice. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.