WASHINGTON—A former board member of NBTY Inc. and his family circle have agreed to settle charges and pay more than USD $500,000 in a case of insider trading, the Securities and Exchange Commission announced last week.
After learning on May 21, 2010 that the vitamin company was negotiating a sale to The Carlyle Group, NBTY board member Glenn Cohen shared confidential information with his siblings, Craig, Steven and Marc, and Marc’s girlfriend, Laurie Topal, the agency said.
Glenn Cohen’s three brothers and Topal purchased NBTY shares within three trading days of discovering the negotiations between NBTY and The Carlyle Group, a leveraged buyout firm, according to the SEC’s complaint. The agency alleged Topal and the three brothers reaped $175,000 in profits after selling stock on the same day the Carlyle Group acquisition was announced.
SEC charged the defendants with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Under a settlement with the agency that is subject to approval in the U.S. District Court for the Southern District of New York, the defendants neither admitted nor denied the allegations.
“As a board member at NBTY for more than 20 years, Glenn Cohen knew the importance of maintaining the confidentiality of company information," said Amelia A. Cottrell, associate director in the SEC’s New York Regional Office, in a statement. “Unfortunately, when presented with exclusive details about an impending sale, he breached his duty to NBTY shareholders in order to enrich his own family members," Lawyers representing four of the defendants did not immediately respond to a request for comment. Jeffrey Plotkin, an attorney representing Steven Cohen, declined comment.
Andrea Staub, a spokeswoman for NBTY, said the SEC’s case did not implicate the company, which was purchased for $4 billion by the Carlyle Group more than three years ago.
“This is a personal matter of a former director of NBTY," she said.
The SEC said Glenn Cohen has agreed to pay a penalty of $153,613.25, and is prohibited from serving as an officer or director of a public company.
The other defendants agreed to the following sanctions:
• Craig Cohen: disgorgement of $71,932, prejudgment interest of $9,606 and a penalty of $71,932;
• Marc Cohen: disgorgement of $21,454, prejudgment interest of $2,865 and a penalty of $21,454;
• Steven Cohen: disgorgement of $60,226, prejudgment interest of $8,042 and a penalty of $60,226; and
• Laurie Topal: disgorgement of $21,780, prejudgment interest of $2,908 and a penalty of $21,780.