The Securities and Exchange Commission filed civil complaints against two brothers on Wednesday, alleging that Andrew W. Jacobs and his brother Leslie J. Jacobs II traded on inside information they possessed about a tender offer made by French pharmaceutical company Sanofi (NYSE: SNY ) to buy OTC health-care manufacturer Chattem in 2010.
In a press release, the SEC described how in December 2009, Andrew learned from his brother-in-law, a Chattem executive, that the buyout was in the works. The brother-in-law told Andrew to keep the information confidential, but Andrew instead called his brother, Leslie, to tell him of the deal -- at which point Leslie allegedly bought 2,000 shares of Chattem before the share price could rise in response to the buyout. Leslie then allegedly sold these shares and pocketed a $49,457.21 profit.
The SEC is now suing the brothers based on those allegations and demanding they be permanently enjoined from taking part in similar shenanigans in the future, disgorge their profits, and pay interest on the illicit profits and penalties in addition. The SEC also wants Andrew Jacobs banned from serving as an officer or director of any public company for a period of time, inasmuch as he was serving in such a capacity for an unnamed public company at the time he allegedly passed confidential information to his brother.