DETROIT (CN) – Five doctors will pay $1.9 million to settle inside-trading charges involving stock in a medical liability insurer, the SEC said Tuesday in a settled complaint.
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The SEC claims that lead defendant Apparao Mukkamala learned confidential information that American Physicians Capital (ACAP) would be acquired by another insurance company, The Doctors Company, of Napa, Calif.
Mukkamala, 67, of Grand Blanc, Mich., was a member of the ACAP board of directors since it was established in 2000 and became chairman of the board in May 2007, the SEC said.
“He is either a family member or friend of the other defendants,” the agency said in the complaint.
Neither ACAP nor The Doctors Company are parties to the complaint.
“Mukkamala in turn shared the nonpublic information with fellow physicians and friends Suresh Anne, Jitendra Prasad Katneni and Rao A.K. Yalamanchili as well as his brother-in-law Mallikarjunarao Anne,” the SEC said in a statement.
It claims the five defendants, all of them physicians, all bought stock before the deal was announced, based on Mukkamala’s confidential information.
Together, they made more than $623,000 in illegal profits after the public announcement, the SEC said.
According to the SEC complaint:
Suresh Anne, 56, also of Grand Blanc, practices with Mukkamala.
Katneni, 63, of Fenton, Mich., is or was chief of staff at Hurley Medical Center, where he and Mukkamala practice.
Mallikarjunarao Anne, 71, of Chicago, is the brother of Mukkamala’s wife.
Yalamanchili, 69, of Staten Island, is a “longstanding friend of Mukkamala’s,” according to the complaint.
ACAP stock rose by 28 percent after the deal was announced. The five doctors, who bought a total of $2.2 million of ACAP stock before the announcement, agreed to pay
$1.9 million to settle the charges, the SEC said.
According to the SEC statement, Mukkamala will pay $631,000; Mallikarjunarao Anne $253,000; Suresh Anne $697,000; Katneni $22,000; and Yalamanchili $298,000.
The settlement is subject to court approval.