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Suit alleges insider trading
Phoenix exec among accused
By Dawn Gilbertson
The Arizona Republic
June 24, 1999
A top-ranking executive and two consultants for Zila Inc. have been charged with insider trading in connection with a 1996 acquisition by the small Phoenix company.
In a civil lawsuit filed Tuesday in U.S. District Court in Phoenix, the Securities and Exchange Commission alleges that Rocco Anselmo, Bill Sklar and John Manion, along with three friends of Anselmo, bought the stock of Bio-Dental Technologies Corp. while Zila was considering a buyout of the California dental supply company.
Each was familiar with details of the deal and traded on material, non-public information, the SEC says.
All of the defendants but Manion settled in conjunction with the lawsuit filing without admitting or denying wrongdoing. They agreed to pay a total of $250,286 in ill-gotten gains, interest and penalties, the SEC said Wednesday.
The number of defendants and settlement terms make it a "sizable" insider trading case, said Kelly Bowers, assistant regional director in the enforcement division of the SEC's regional office in Los Angeles.
Anselmo and Sklar, contacted at Zila, which did not return calls seeking comment. They are the only two defendants from Arizona. Manion's consulting firm is in Florida and Anselmo's friends are scattered throughout the country.
Zila issued a statement saying it has not seen the complaint and "has no knowledge of the specific events that are apparently subject to (the) SEC's allegations."
Of the individuals involved, Anselmo is the highest ranking and appears to have the most involvement in the case. With Zila since 1993, he was general manager of Zila Pharmaceuticals at the time of the alleged incident and president of that subsidiary until last month. In an announcement on May 19, Zila named Nancy Katz president of the division. It said Anselmo would become manager of special projects, reporting to the president of Zila Inc.
Anselmo bought 10,000 shares of Bio-Dental in late April 1996, a couple weeks after Zila Chief Executive Officer Joseph Hines asked him to work on the Bio-Dental acquisition, according to the SEC's complaint. He paid between $2.88 and $3.13 per share. Bio-Dental's stock climbed to about $4 before the acquisition was announced and jumped to $5.38 on June 3, the day the deal was announced. Anselmo's profit on his purchase was $23,363, the SEC says.
In addition to trading in his own account, Anselmo allegedly tipped three longtime friends to the deal and placed trades for Bio-Dental stock for them, in their accounts. Altogether, the friends purchased 31,200 shares, obtaining total profits of $67,294, according to the SEC.
In one case, the SEC says, Anselmo transferred $30,800 of his money into the friend's brokerage account and then placed orders to buy Bio-Dental stock from the account.
Sklar, who lives in Tucson, is Zila's longtime public relations consultant. He was briefed on the Bio-Dental deal in mid-April 1996 and purchased Bio-Dental stock less than 10 days later. He made four more purchases of the stock in May, for a total 9,000 shares and a profit of $20,045, according to the lawsuit.
Manion owns Continental Capital & Equity Corp., a financial public relations company based in Florida.
In early May 1996, Hines asked Manion, whom he's known since 1994, to evaluate Bio-Dental and provide a written evaluation of the company, the lawsuit says. Two days after giving the proposed deal a thumbs up, Manion allegedly purchased 7,000 shares of Bio-Dental. He followed it up with more trades, eventually buying 13,000 Bio-Dental shares and realizing a profit of $28,024,the lawsuit says.
Although Zila says it hasn't seen the complaint, it was obviously aware of the SEC's investigation.
The lawsuit says Zila said it has a policy prohibiting employees from disclosing any pending projects or proposals and that during the Bio-Dental negotiations employees were "regularly reminded of the written policies preventing the disclosure of proprietary information and there was an understanding among the employees of the importance of these non-disclosure policies."
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Dawn Gilbertson may be reached at 444-8617 or
dawn.gilbertson@pni.com via e-mail.
KJC |
