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U.S. Securities and Exchange Commission

SEC Freezes Assets of French Citizens Within Days of Insider Trading


Washington, D.C., Dec. 23, 2009 — The Securities and Exchange Commission has obtained an emergency asset freeze against two French men it charged with insider trading the day after they tried to illegally profit from a Paris-based manufacturer’s acquisition of another health care products company located in Chattanooga, Tenn.

The SEC alleges that Nicolas Patrick Benoit Condroyer and Gilles Robert Roger, who reside in Brussels, Belgium, purchased hundreds of "out-of-the-money" call option contracts for stock in Chattem, Inc., which manufactures and markets over-the-counter health care products. Condroyer and Roger purchased the contracts in newly-opened U.S. option brokerage accounts while in possession of material, nonpublic information regarding the impending acquisition of Chattem by Sanofi-Aventis, one of the world's largest health care products companies.

According to the SEC's complaint in the case, when the $1.9 billion acquisition was announced publicly on December 21, Condroyer and Roger immediately sold all of their options for illicit profits of approximately $4.2 million. The SEC filed insider trading charges against them the very next day.

"These two men tried to take advantage of the marketplace and cash in on millions of dollars in illegal trades," said William P. Hicks, Regional Trial Counsel in the SEC's Atlanta Regional Office. "Fortunately they were caught in the act and the money was successfully frozen."

The SEC's enforcement action was filed in federal court in Atlanta. The court order, also obtained on December 22, freezes approximately $4.2 million in assets and prohibits Condroyer and Roger from destroying evidence.

According to the SEC's complaint, Sanofi agreed to pay $1.9 billion for 100 percent of Chattem's outstanding shares at a price of $93.50 per share. The acquisition share price represents a 32.6 percent premium above the closing price of $69.98 on the prior trading day, December 18.

The SEC alleges that Condroyer was in possession of material, nonpublic information regarding the Chattem acquisition by Sanofi while he purchased, from December 7 to 18, more than 1,900 option contracts for Chattem stock that were set to expire on January 15, within weeks of the purchase date. The SEC similarly alleges that on December 17 and 18, Roger purchased 940 contracts for Chattem in an account he opened at the beginning of that week while in possession of material, nonpublic information regarding the acquisition. These contracts also were set to expire on January 15. The SEC further alleges that there have been no transactions in either Condroyer's or Roger's account other than the purchase and sale of Chattem call options.

The Commission alleges that Condroyer and Roger violated of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the Commission is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The Commission thanks the Options Regulatory Service Authority (ORSA) for its assistance in this matter.

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For more information about this enforcement action, contact:

William P. Hicks, Regional Trial Counsel
M. Graham Loomis, Assistant Regional Director
SEC's Atlanta Regional Office



Modified: 12/23/2009