On September 20, 2013, the Securities and Exchange Commission (“SEC”) filed a Complaint in the United States District Court for the Southern District of Florida against registered representative, Tibor Klein, and former registered representative, Michael Shechtman, which alleged that Klein and Shechtman (collectively referred to as “Defendants”) engaged in insider trading of King Pharmaceuticals, Inc. (“King”) securities prior to an October 2010 tender offer announcement. The Complaint alleges that Klein, an investment adviser and owner of Klein Financial Services, learned of nonpublic material information regarding Pfizer’s acquisition of King from his friend who was an attorney representing King. The SEC claims that Klein misappropriated that information and purchased securities in King for himself, and at least 40 of his clients, before the insider information went public. The Complaint also alleges that Klein provided the inside information to Shechtman, a former broker who used to be affiliated with Ameriprise Financial Services, Inc., who also used the information to purchase King securities for himself and his wife. Further, it is alleged that after the information regarding Pfizer’s acquisition of King was made public, Klein sold his and his clients’ King securities which earned Klein a profit of $8,824, and generated profits in his clients’ accounts in the amount of $319,550. Similarly, the Complaint alleges that after the information became public, Shechtman sold his and his wife’s King securities for a profit of $109,040. The Complaint alleges that the Defendants violated Section 10(b) and 14(e) of the Exchange Act, and seeks disgorgement of ill-gotten gains, financial penalties and a permanent injunction enjoining Defendants from future violations of federal securities laws.
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