Six Charged With Insider Trading Ahead of FDA Announcements
Sep. 06, 1996
WASHINGTON (AP) _ Regulators charged six people with illegal insider trading in shares of a Florida drug company before announcements by the Food and Drug Administration concerning one of the company's popular pain killers.
The Securities and Exchange Commission said three employees of Royce Laboratories Inc., and well as three relatives and friends, either made profits or avoided losses totaling $143,000 through insider trades of Royce stock in 1991 and 1992.
The SEC has been investigating the Miami-based Royce since February, 1993, concerning its public statements about applications with the FDA to make two generic drugs. In May, Royce settled SEC charges concerning a misleading press release about one of the drugs, Piroxicam. The drug, known by the brand name Feldene, is the generic version of a popular pain killer used for arthritis treatment.
Royce, which didn't admit or deny wrongdoing in the press release case, wasn't named in the latest SEC case.
In a lawsuit filed in U.S. District Court in Brooklyn, the SEC charged that three Royce employees purchased the company's common stock in September 1991 based on confidential information: that Royce had received or soon would win tentative FDA approval to market Piroxicam.
The three employees charged by the SEC are Abul Bhuiyan, 43, of Miami Springs, Fla.; Nilkanth Patel, 41, of Copper City, Fla.; and Hasmukh Patel, 47, of Copper City, Fla.
The illegal trading expanded when Nilkanth Patel tipped two friends: Janak C. Patel, 39, of Elmhurst, Ill., and Janak M. Patel, 36, of Wood Dale, Ill., the SEC said.
In turn, Janak C. Patel was charged with tipping a relative, Kanubhai Patel, 43, of Flushing, N.Y., and Hasmukh Patel was charged with tipping another relative, who was unidentified, the SEC said.
This group of relatives and friends purchased Royce securities prior to the Sept. 11, 1991 public announcement about the FDA tentative clearance of Piroxicam.
A second round of insider trading took place before Royce announced on April 22, 1992, that the FDA denied final approval of Piroxicam. The SEC said Nilkanth Patel, Hasmukh Patel, Janak M. Patel and Kanubhai Patel illegally sold stock before release of the bad news from FDA.
The attorney for Janak C. Patel and Janak M. Patel said he was in settlement discussions with the SEC on the case and declined further comment.
William Nortman _ attorney for Bhuiyan, Nilkanth Patel and Hasmukh Patel _ said it was surprising to see the SEC bring a case based on allegations that dated almost five years ago. He said his clients first have to review the SEC's lawsuit ``and then consider their options.'' Nortman said the SEC isn't seeking Bhuiyan to repay anything in the case.
The attorney for Kanubhai Patel wasn't available for comment.