Litigation Release No. 19995A / February 13, 2007

SEC v. Aragon Capital Management LLC, Aragon Partners LP, Zvi Rosenthal, Amir Rosenthal, Ayal Rosenthal, Oren Rosenthal, David Heyman, Heyman & Son Investment Partnership LP, Young Kim, and Bahram Delshad, 07 CV 00919 (KMK ) (S.D.N.Y.)

SEC Charges Family With $3.7 Million Insider Trading Scheme

The Securities and Exchange Commission ("Commission") today announced the filing of a civil action in federal district court in New York, New York involving a rampant insider trading scheme which generated more than $3.7 million in profits and losses avoided for a family and certain friends over a five year period. From at least 2001 through 2005, seven individuals, including lawyers and accountants, participated in a scheme to trade in the stock and option contracts of Taro Pharmaceuticals Industries, Ltd. ("Taro"), an Israeli-based publicly traded pharmaceutical company, ahead of eight earnings announcements and five FDA approval announcements. In the later stages of the scheme, certain of the defendants broadened the scheme by trading on information stolen from Pricewaterhouse Coopers LLP ("PwC") and Ernst & Young, LLP ("E&Y") concerning two possible mergers.

In its complaint, the Commission alleged that Zvi Rosenthal ("Zvi"), a Vice President at Taro, abused his position at Taro by systematically stealing material, nonpublic information concerning 13 separate company announcements, including earnings results and pending generic drug approvals by the Food and Drug Administration. Zvi then traded on the information and passed it on to his family members who then traded in Taro stock and options. Typically, Zvi provided information to his son, Amir Rosenthal ("Amir") who traded in personal accounts he controlled, and in the account of the family- owned and controlled hedge fund, Aragon Partners, LP. Amir also tipped his brothers, Oren Rosenthal ("Oren") and Ayal Rosenthal ("Ayal"); his father-in-law, Bahram Delshad ("Delshad"); his best friend, David Heyman ("Heyman"); and his work supervisor, Young Kim ("Kim"), with information he received from Zvi, and each of them traded. The complaint further alleges that in its later stages, certain of the defendants broadened the scheme to include trading on nonpublic information stolen from entities other than Taro. On at least two occasions, Ayal and Heyman misappropriated material, nonpublic information concerning impending mergers from their respective employers, PwC and E&Y, and tipped Amir with the information. Amir then traded on it. Amir also tipped Kim with the information from Ayal and Heyman, and Kim traded on the information.

The Commission's complaint, filed in the U.S. District Court for the Southern District of New York, charges Zvi, Amir, Oren, Ayal, Aragon Partners, LP, Aragon Capital Management, LLC, Heyman, Heyman & Son Investment Partnership LP, Delshad, and Kim with violations of the antifraud provisions of the federal securities laws. The Commission is seeking permanent injunctive relief, disgorgement of all illegal profits and losses avoided plus prejudgment interest and the imposition of civil monetary penalties against the defendants. The complaint also seeks an officer and director bar against Zvi.

The Commission has reached an agreement with Kim to settle the insider trading charges against him. Kim has consented to a final judgment permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay $4,287.71 in disgorgement of his ill-gotten gains plus prejudgment interest, and $41,702.29 in civil penalties. Kim consented to the final judgment without admitting or denying the allegations in the complaint. The Commission will file the proposed judgment with the U.S. District Court in New York, New York for consideration and approval.

The Commission appreciates the cooperation of the United States Attorney's Office for the Eastern District of New York and the Federal Bureau of Investigation in the investigation of this matter.

SEC Complaint in this matter