SEC Charges Former Controller of Now-Bankrupt Company with Insider Trading
Litigation Release No. 24912 / September 23, 2020
Securities and Exchange Commission v. Edward T. Kelly, Civil Action No. 20 Civ. 04479 (E.D.N.Y., filed September 23, 2020).
The Securities and Exchange Commission today charged Edward T. Kelly, the former Controller of Aceto Corporation, with insider trading.
According to the SEC's complaint, after Kelly retired from Aceto in March 2018, the company formally retained him as a consultant to assist in closing Aceto's books for the quarter ending March 31, 2018. While working as a consultant, Kelly allegedly obtained non-public information about Aceto's poor sales and earnings results and a pending impairment charge. The complaint alleges that while in possession of this information, Kelly sold all of his Aceto shares and exercised and sold his in-the-money stock options in advance of the information being released, profiting and avoiding losses of more than $85,000 in the aggregate.
The SEC's complaint, filed in U.S. District Court for the Eastern District of New York, charges Kelly, a resident of Lakewood Ranch, FL, with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations of the complaint, Kelly consented to the entry of a final judgment that enjoins him from violating the charged provisions, bars him from serving as an officer or director of a public company, and imposes a civil penalty of $170,228. The proposed settlement is subject to court approval.
The SEC’s investigation was conducted by Eric Kirsch, Michael Ellis, Elzbieta Wraga, Richard Hong and Wendy Tepperman, and was supervised by Sanjay Wadhwa, all of the New York Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.