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 A jury in the U.S. district court in Cleveland, Ohio, found that
Andrew Jacobs and Leslie Jacobs committed insider trading in the
context of a tender offer, the U.S. Securities and Exchange
Commission announced in a statement.
At the same time, the jury also found that the brothers were not
liable under a broader insider trading statute not specific to
tender offers, Ned Searby, a lawyer for Leslie Jacobs, said.
The decision is the latest in a string of mixed jury verdicts that
highlight how difficult it can be for the SEC to obtain clear-cut
victories in complex securities cases.
Searby said in an email: "We do not understand the basis for the
verdict and we are considering our options."
David Wilson, a lawyer for Andrew Jacobs, declined to comment.
In its civil lawsuit, filed in June 2013, the SEC said Andrew Jacobs
learned of Sanofi's plan to make a tender offer for Chattem Inc from
his brother-in-law who was an executive at the U.S. maker of allergy
medicines.
The SEC said that although Andrew Jacobs agreed to keep the
discussion confidential, he called his brother, Leslie, the next day
and told him the company was going to be acquired. Days later,
Leslie purchased 2000 shares of Chattem for around $137,000, which
he sold after the deal was announced for a profit of over $49,000,
the complaint said.
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The lawsuit alleged violations of the Securities Exchange Act and
sought monetary penalties as well as an order barring Andrew Jacobs
from serving as an officer or director of a public company. At the
time of the tip, he was a high-level executive of a public company,
the SEC said.
"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," SEC enforcement director
Andrew Ceresney said in a statement on Thursday.
The lawsuit is at least the eighth case the commission has brought
alleging insider trading connected to Sanofi's acquisition of
Chattem.
The case is SEC v. Jacobs et al, U.S. District Court for the
Northern District of Ohio, No. 13-1289.
(Reporting by Terry Baynes in New York;
editing by Edwina Gibbs)
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