SEC scores partial win in insider trading case over 2009 Sanofi deal

Thu Mar 6, 2014 9:47pm EST
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By Terry Baynes

(Reuters) - Federal securities regulators have won a partial victory against two brothers accused of trading on inside information in 2009 about French pharmaceutical company Sanofi's plan to buy a Tennessee-based company.

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.   Continued...