SEC Charges Two South Florida Residents with Insider Trading

Litigation Release No. 24772 / March 19, 2020

Securities and Exchange Commission v. Scott O. Hirsch and Kenneth L. Friedman,

Case No. 9:20-CV-80435-DMM (S.D. Fla., filed March 17, 2020)

The Securities and Exchange Commission filed charges on March 17, 2020 against two South Florida residents for insider trading in the stock of PetMed Express, a Florida-based, publicly-traded, online pet pharmacy.

The SEC's complaint alleges that Scott O. Hirsch and Kenneth L. Friedman, both Delray Beach, Florida residents, were tipped material, nonpublic information by an acquaintance who was then a senior manager of PetMed and a member of PetMed's management committee. According to the SEC's complaint, the senior manager had access to PetMed's quarterly earnings, business operations, and financial performance. As alleged, the senior manager provided Hirsch and Friedman information about PetMed's fiscal 2017 fourth quarter and year-end financial results before the company's May 8, 2017 earnings announcement. Hirsch and Friedman traded on the basis of the information, and Hirsch further tipped his relatives.

Without admitting or denying the allegations in the SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, Hirsch and Friedman consented to permanent injunctions prohibiting them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Hirsch agreed to pay $74,536 in disgorgement, $9,585 in prejudgment interest, and a civil money penalty of $95,472. Friedman agreed to pay $501,697 in disgorgement, $64,517 in prejudgment interest, and a civil monetary penalty of $501,697.

The SEC's investigation, which is continuing, is being conducted by Jordan A. Cortez and supervised by Jessica M. Weissman and Glenn S. Gordon, with the assistance of trial counsel Robert K. Levenson. The SEC thanks the Financial Industry Regulatory Authority for its assistance in this matter.