SEC Charges Regional VP of Retail Pharmacy with Insider Trading
The SEC charged a regional vice president for a retail pharmacy chain with insider trading involving "market-moving" information.
In a Complaint filed in the U.S. District Court for the Middle District of Pennsylvania, the SEC alleged that the vice president traded on information that the merger between his employer, Rite Aid Corp., and Walgreens Boots Alliance, Inc. would not close by January 27, 2017 as expected. Based on this non-public information, the vice president allegedly liquidated (i) all of his stock and (ii) almost all of his options in Rite Aid Corp. According to the Complaint, he avoided $82,277 in losses as a result of these trades.
The SEC is requesting a final judgment ordering the vice president to (i) be permanently restrained and enjoined from further violation of SEC rules, (ii) disgorge the losses avoided through insider trading, and (iii) pay a civil monetary penalty.
Commentary
While this is a pretty routine SEC insider trading case, it is also an example of the SEC's efforts to demonstrate that it is maintaining its investor protection and enforcement efforts during the COVID-19 crisis. The SEC has announced more than a dozen new enforcement actions in the past week as if trying to prove its commitment to zealous enforcement during the crisis. However, given how rapidly the COVID-19 crisis is changing, and how SEC staff is working from home and facing travel restrictions, it remains to be seen how long the enforcement program can stay fully operational.