TRENTON, N.J. (CN) – The SEC charged the founder and former chairman of the board of Home Diagnostics with inside trading. It claims George Holley tipped six friends that Nipro Corp. was about to buy his company, so they bought Home Diagnostics stock, and when its price rose by 89 percent after the public announcement, they sold it for profits of more than $260,000.
The SEC sued Holley, his personal accountant Steven Dudas and friend Phairot Iamnaita in Federal Court. Dudas and Iamnaita reaped $90,120 from the inside trading, the SEC says.
The SEC says also tipped four unidentified traders, one of them a relative, who made a total of $171,160 from the inside trading.
“In addition to tipping, Holley provided at least Traders 3 and 4 with a cover story, giving them copies of analyst reports on HDI and telling them that they should use the reports to justify their illicit trading on the basis of his tips,” the SEC said in its complaint.
The SEC does not explain why it did not sue Traders 1, 2, 3 and 4. It seeks disgorgement, penalties and an injunction.