Question:
Sullivan Dental Ex-Officer Accused of Tipping Friends to Merger Washington, Sept. 29 (Bloomberg) -- Sullivan Dental Products Inc.'s former president tipped off three friends who made inside trades ahead of the company's 1997 merger with Henry Schein In ?
Answer:
The SEC alleged that Timothy J. Sullivan, 34, president and chief financial
officer of the West Allis, Wisconsin-based dental supplies distributor, tipped
off friends about the Schein merger during the last weekend of July 1997.
Melville, New York-based Schein is the largest supplier of dental and medical
equipment to office-based practitioners in North America and Europe.
During the following week, Sullivan's friends -- James G. Appleton, 35, Lance
P. Lins, 35, and James A. Budzinski, 34 -- all bought Sullivan Dental stock and
tipped off various family members and friends, who also bought stock, the SEC
contended in a lawsuit filed in Milwaukee federal court.
The SEC lawsuit seeks fines from each of the defendants as well as repayment of
their allegedly ill-gotten gains. Sullivan's lawyer declined to comment.
Lawyers for the other defendants could not be reached.
Some of the buyers had little or no investing experience and borrowed more than
their annual income in order to make the purchases, the SEC said.
On Aug. 4, 1997, when Sullivan Dental and Henry Schein publicly announced
they'd definitively agreed to a stock-for-stock merger, Sullivan Dental stock
closed at $28.50 per share, an increase of $6.25 per share from the previous
day's closing price, the SEC said.
As a result of their inside trades, Appleton, Lins and Budzinski and those they
tipped off received about $175,600, the SEC said.
A spokeswoman for Henry Schein said the case ``has no impact on our company''
and that Sullivan was never an officer of Schein.
Sullivan is a resident of Hartland, Wisconsin, the SEC said. Appleton and Lins
are residents of Green Bay, Wisconsin, and Budzinski is a resident of Muskego,
Wisconsin.
I guess they are all in a boatload of trouble. It looks obvious there
was inside trading and most likely there was. The SEC will nail em
good, I guess. They'll get spanked and have to give all the profits
baaaaack.. bad boys!!!. They might have to sell the new BMW.
So it looks like the SEC says that because you buy stock in a company
run by a friend your purchase was influenced by inside information
from that friend, especailly if you buy a LOT of stock and make a LOT
of money very quickly.
A big quick profit must be overwhelming proof that you acted on inside
information that was not public knowledge. No doubt whatsoever?
Now, if these friends lost a lot of money trading on insider
information would the SEC require them to give back the loss? Yeah,
right!
Or what if these guys bought stock the day BEFORE finding out from
their buddy, the president of the company that their stock was going
to be worth a whole lot more. I mean they could claim their
astrologer, who was not an officer in the company, told them to go
out, borrow money and buy up the dental stock.
