With deals comes inside information, and with inside information can come insider trading. That is the suggestion in the case of Sanofi's acquisition of consumer health company Chattem. On Tuesday, the SEC filed civil complaints against two brothers accused of buying stock based on secret knowledge of the then-upcoming takeover--the 8th case the Commission has brought against insider trading connected to that deal, it says.
The SEC's allegations against Andrew W. Jacobs and Leslie J. Jacobs II date back to 2010, when the Commission claims Andrew Jacobs learned from his brother-in-law, a Chattem exec, of Sanofi's ($SNY) $1.9 billion tender for the Tennessee-based distributor of OTC products. According to the complaint, Andrew Jacobs called his brother the following day to alert him of the upcoming deal, resulting in Leslie Jacobs purchasing 2,000 shares of Chattem stock. The SEC says he later sold those shares for a profit close to $50,000.
The Motley Fool reports that the Commission now wants Andrew Jacobs banned from serving as an officer or director of any public company for some time and for the brothers to disgorge their profits and pay interest on them. The brothers are far from the only ones to allegedly profit from the deal. Last summer, securities regulators charged 8 men with collectively raking in $500,000 on trades related to confidential information about Sanofi's move gleaned by an accountant from his client, a Chattem board member.
Scandals like these have been arising throughout the industry over the past year. Just this week, a former Bristol-Myers Squibb ($BMY) pension executive pleaded guilty to securities fraud after grabbing $310,000 in insider trading profits. The plea follows April reports that the SEC had launched an investigation into trades by former Dendreon ($DNDN) CEO Mitchell Gold, and in January, the former portfolio manager for SAC Capital pleaded not guilty to charges that he got insider info that brought his firm $276 million.