SEC Charges Former CFO of Now-Bankrupt Company with Insider Trading
Litigation Release No. 24961 / November 9, 2020
Securities and Exchange Commission v. Douglas A. Roth, Civil Action No. 20 Civ. 05368 (E.D.N.Y., filed November 5, 2020).
The Securities and Exchange Commission has charged Douglas A. Roth, the former Chief Financial Officer of Aceto Corporation, with insider trading.
According to the SEC's complaint, filed on November 5, 2020, while working as Aceto's CFO, Roth obtained non-public information concerning several negative developments at Aceto, including poor sales and earnings for the quarter ending March 31, 2018, a pending impairment charge, consideration of discontinuing Aceto's dividend, and Aceto's negotiations with its creditors seeking an amendment or waiver of financial covenants that had been amended only months earlier. The complaint alleges that while in possession of this confidential information, and within days of his March 31, 2018 retirement, Roth sold all of the Aceto shares that vested upon his retirement, avoiding losses of more than $305,000.
The SEC's complaint, filed in U.S. District Court for the Eastern District of New York, charges Roth, a resident of East Northport, NY, with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, civil monetary penalties, and a bar from serving as an officer and director of a public company.
In a parallel action, the U.S. Attorney's Office for the Eastern District of New York today filed criminal charges against Roth.
The SEC's investigation has been conducted by Eric Kirsch, Michael Ellis, Elzbieta Wraga, and Wendy Tepperman, and the litigation will be led by Richard Hong, all of the New York Regional Office. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the United States Attorney's Office for the Eastern District of New York, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.