Three defendants were sentenced in federal court in an appalling case of insider trading. The United States Attorney’s Office announced that Zvi Rosenthanl, Amir Rosenthal, and David Heyman will face years in prison and hefty fines for their insider trading participation. Each of these defendants traded securities in publicly held companies with misappropriated confidential information. Each defendant held prestigious positions in their respective industries which gave them access to the information they used to perform the insider trading scheme.
Zvi Rosenthal was a former vice president at Taro Pharmaceutical Industries, Ltd. He has been sentenced to five years in prison and a $100,000 fine. His son, Amir Rosenthal, worked as an attorney in New York City. He has been sentenced to thirty-three months in prison and a $75,000 fine. David Heyman received a fifteen month sentence. He was formerly an accountant at Ernst & Young, a prestigious national accounting firm.
The government’s investigation into these crimes revealed some shocking details. These individuals used their positions to steal confidential information from their employers with the hopes of turning a profit in the securities market. For example, while working at Taro Pharmaceuticals, Zvi Rosenthal had access to specific confidential information.
One piece of this information was Taro’s expected confirmation from the Food and Drug Administration concerning the approval of a new generic drug. Zvi also had access to the company’s quarterly financial statements before they were made public. Zvi then passed this information along to his son, Amir, and David Heyman, who subsequently placed profitable options trades before the confidential information was made available to the public.
The federal investigation further revealed that David Heyman communicated information to Amir concerning the future merger of two large publicly-held corporations. Amir Rosenthal quickly executed options trades in hopes for a profit after learning of this information. Other illegal options trading schemes also took place between these three defendants and a fourth defendant, Ayal Rosenthal, who received a two month sentence near the end of May.
The four defendants all pleaded guilty to the charges against them. Prior to their sentencing, they profited more than two million dollars from this insider trading scheme.
Individuals who have the access to the type of information that may reveal trends in the market should be wise not to use that information illegally. Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York stated in the press release, “When licensed professionals or corporate insiders abuse their positions of trust for personal profit, they will face prompt investigation and prosecution.” Hopefully this case in Brooklyn proves just that, that these insiders will be caught and prosecuted.
Eastern District of New York United States Attorney’s Office, http://www.usdoj.gov/usao/nye/pr/2007/2007jul20b.html