Recent actions announced by the SEC or that will come before FINRA include charges of insider trading, violation of the Foreign Corrupt Practices Act (FCPA) and a suit filed by an investment company against breakaway brokers.
Physicians Charged in Insider Trading
Five physicians charged by the SEC with insider trading in the securities of an East Lansing, Mich.-based holding company for a medical professional liability insurer agreed to pay a combined total of more than $1.9 million to settle the charges.
Without admitting or denying the charges, Apparao Mukkamala, Suresh Anne, Jitendra Prasad Katneni and Rao A.K. Yalamanchili, as well as Mukkamala’s brother-in-law Mallikarjunarao Anne agreed to pay disgorgement, prejudgment interest and financial penalties. Mukkamala further agreed to be barred from acting as an officer or director of a public company.
Mukkamala, a resident of GrandBlanc, Mich., served as a board member for American Physicians Capital (ACAP) since the company’s formation in July 2000. He became its chairman in May 2007. The SEC alleged that Mukkamala learned confidential information from board meetings and other communications about the anticipated acquisition of ACAP by another insurance company, which he then shared with the other four.
All five subsequently bought stock in ACAP, prior to a public announcement of the sale. Mukkamala also made trades in the account of Chinmaya Mission West, a charitable organization for which he was then serving as president. Once the sale was announced, they collectively made more than $623,000 in illegal profits on their ACAP stock.
The settlement is subject to court approval.
Medical Devices Company Charged with Violation of FCPA for Bribery
The SEC charged the Texas-based medical device company Orthofix International with violating the Foreign Corrupt Practices Act (FCPA) when a Mexican subsidiary paid routine bribes referred to as “chocolates” to Mexican officials in order to obtain lucrative sales contracts with government hospitals. Settling the charges could cost the company $5.2 million in disgorgement and prejudgment interest if the settlement is approved.