U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19777 / July 27, 2006
SEC v. Harish K. Pimplaskar and Charan R. Behl, C.A. No. 1:06CV01327 (D.D.C.) (RMU)
SEC Files Settled Insider Trading Charges Against Former Pozen Inc. Employee and Tippee
The Securities and Exchange Commission announced today that it filed a settled civil injunctive action in the United States District Court for the District of Columbia against Harish K. Pimplaskar, a former employee of Pozen Inc., a pharmaceutical development company, and Charan R. Behl, a friend and professional acquaintance of Pimplaskar, alleging that they engaged in insider trading in Pozen securities in violation of the antifraud provisions of the federal securities laws. Without admitting or denying the allegations in the Commission's complaint, Pimplaskar and Behl have agreed to settle this matter by consenting to the entry of final judgments against them which impose injunctive and monetary relief.
The Commission's complaint alleges that on May 28, 2004, the Food and Drug Administration ("FDA") informed Pozen that it was denying the company's New Drug Application for approval of MT 100, a new migraine medication. The complaint further alleges that, upon hearing the news, Pimplaskar immediately sold his existing holdings of Pozen shares on the basis of this material, nonpublic information. The complaint also alleges that later that afternoon, Pimplaskar tipped his friend Behl. Behl, the complaint alleges, immediately proceeded to sell out his pre-existing long position in Pozen stock - and then started short-selling the stock - on the basis of this material, non-public information.
The complaint alleges that the per share price of Pozen shares fell 37% on June 1, 2004, after the company announced the FDA's decision. The complaint further alleges that Pimplaskar avoided losses of $1,392.00 by selling Pozen stock in advance of the public release of the news, and that Behl avoided losses of $35,088.08 on his long sales and realized illicit profits of $56,753.66 on his short sales, in advance of the public release of the news.
Based on the facts alleged, the Commission charged Pimplaskar and Behl with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations of the complaint, both defendants have agreed to settle the Commission's charges by consenting to the entry of final judgments that, if approved, would permanently enjoin both of them from further violations of the federal securities laws. In addition, the final judgment against Pimplaskar would require him to pay $1,552.69 in disgorgement and prejudgment interest, and a civil penalty of $33,447.31. The amount of Pimplaskar's civil penalty is based, in part, on his sworn representations in his Statement of Financial Condition. The final judgment against Behl would require him to pay $102,443.46 in disgorgement and prejudgment interest, and a civil penalty of $91,841.74.