March 6 -- Two brothers were found liable March 6 in the U.S. District Court for the Northern District of Ohio on charges that traded on inside information about a tender offer for Chattem Inc., a Tennessee-based pharmaceutical product distributor, by Sanofi-Aventis, a French drug company (SEC v. Jacobs, N.D. Ohio, 1:13-cv-01289, 3/6/14).
The Securities and Exchange Commission alleged that defendant Andrew W. Jacobs learned about the pending bid during a confidential conversation with his brother-in-law, who was then a Chattem executive (114 SLD, 6/13/13). Allegedly, although asked to keep the conversation confidential, Andrew Jacobs tipped his brother, Leslie J. Jacobs II to the inside information. A few days later, the SEC alleged, Leslie Jacobs purchased 2,000 shares of Chattem, which he sold following the Dec. 21, 2009 announcement of the tender offer for a profit of $49,457.21.
After a trial, a jury found both men liable under 1934 Securities Exchange Act Section 14(e) and Rule 14e-3, barring fraud in connection with a tender offer. It absolved the defendants of violating Section 10(b) and Rule 10b-5, the act's general antifraud proscription.
In a statement, SEC Enforcement Director Andrew Ceresney said, “We are gratified that the jury unanimously found that both defendants committed insider trading in the context of a tender offer. The defendants were found to have violated one of the Commission's core anti-fraud provisions that is aimed at protecting the investing public by preventing those with insider knowledge from illegally profiting from their fraudulent trading."
Andrew Jacobs is represented by David Wilson of Thompson Hine LLP, Washington. Leslie Jacobs is represented by Edmund Searby of BakerHostetler, Cleveland.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).