Scott O. Hirsch – SEC Charged Him with Insider Trading Fraud (New Update 2023)
SEC Charged two south Florida residents with Insider Trading, one of them was Scott O. Hirsch. The Securities and Exchange Commission charged two South Florida residents with insider trading in the stock of PetMed Express, a publicly traded online pet pharmacy based in Florida, on March 17, 2020.
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About PetMed Pharmacy
PetMed Express, Inc., often known as PetMeds, is a US-based online pet pharmacy. It is a publicly traded company that sells prescription and over-the-counter pet medications.
PetMed Express is an online pharmacy that sells prescription and over-the-counter pet medications as well as nutritional supplements. It can only fill veterinary prescriptions and competes with veterinarians who make some of their money by selling pet medication.
PetMed Express, Inc. (PetMed Express) is a pet pharmacy that operates under the name 1800PetMeds. The Company sells prescription and non-prescription pet pharmaceuticals, as well as other health goods for dogs and cats, to consumers directly.
It sells a variety of items for dogs and cats. Its product line includes about 3,000 stock-keeping units of pet pharmaceuticals, health goods, and supplies. Its medicine names include Frontline Plus, K9 Advantix II, Advantage II, Heartgard Plus, Sentinel, Revolution, and Rimadyl. It also sells other pet items on its website, which are drop sent to customers by third parties.
Food, beds, crates, stairs, strollers, and other pet equipment are among the items available. Its products comprised Non-Prescription Medications (OTC) and supplies, as well as Prescription Medications (Rx). Customers include those in California, Florida, Texas, New York, Virginia, and Georgia, among other places.
The SEC has charged two South Florida men with insider trading in an online pet pharmacy investment that netted them $575,000.
On March 17, 2020, the Securities and Exchange Commission charged two South Florida citizens with insider trading in the stock of PetMed Express, a publicly traded online pet pharmacy situated in Florida.
According to the SEC’s complaint, Scott O. Hirsch and Kenneth L. Friedman, both of Delray Beach, Florida, were given substantial, nonpublic information by a friend who was then a senior manager at PetMed and a member of PetMed’s management committee. The senior manager had access to PetMed’s quarterly profits, business operations, and financial performance, according to the SEC complaint. According to the allegations, the senior management provided Scott O. Hirsch and Friedman with knowledge about PetMed’s fiscal 2017 fourth quarter and year-end financial figures prior to the company’s earnings announcement on May 8, 2017.
Scott O. Hirsch and Friedman traded based on their knowledge, and Hirsch tipped his family more.
Scott O. Hirsch and Friedman consented to permanent injunctions prohibiting them from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder without admitting or denying the allegations in the SEC’s complaint, which was filed in the United States District Court for the Southern District of Florida.
Scott O. Hirsch agreed to pay a disgorgement of $74,536, prejudgment interest of $9,585, and a civil money penalty of $95,472. Friedman agreed to pay a disgorgement of $501,697, prejudgment interest of $64,517, and a civil monetary penalty of $501,697.
Jordan A. Cortez is leading the SEC’s ongoing investigation, which is overseen by Jessica M. Weissman and Glenn S. Gordon, with help from trial counsel Robert K. Levenson. The SEC wishes to express its gratitude to the Financial Industry Regulatory Authority for its cooperation in this issue.
- The senior manager had access to material, nonpublic information concerning PetMed’s business operations, financial performance, and quarterly earnings.
- The senior manager was aware of PetMed’s Prohibitions against Insider Trading.
- The senior manager tipped Scott O. Hirsch material, nonpublic information concerning PetMed’s Fiscal 2017 fourth quarter and year-end financial results.
- The senior manager tipped Friedman material, nonpublic information concerning PetMed’s Fiscal 2017 Fourth quarter and year-end financial results.
SEC Insider Trading Suit Against PetMed Express Settled for $1.2 Million
A Florida advertising executive and the president of a New York insurance company have agreed to pay nearly $1.25 million to resolve charges they traded on inside information concerning online pet pharmacy PetMed Express Inc’s financial results.
Both men were allegedly tipped off by an ex-PetMed senior manager.
Scott O. Hirsch will pay nearly $180,000, while Friedman will pay more than $1 million.
What is Insider Trading?
- Insider trading is prohibited in the United States while material information is still secret, and individuals who engage in it face severe penalties.
- Insider trading is defined as the purchase or sale of stock in a publicly listed corporation by someone who has non-public, substantial information about that stock.
- Material nonpublic information is any information that has not been made public that could have a significant impact on an investor’s decision to buy or sell an asset.
- This type of insider trading is unlawful and carries severe penalties, including both fines and jail time.
- Insider trading is permissible as long as it follows the SEC’s standards.
How insider trading is Illegal?
Insider trading is considered illegal when the material knowledge is still non-public, and it carries severe penalties, including significant fines and jail time. Material nonpublic information is defined as any information that could have a significant impact on the company’s stock price.
Obviously, having access to such knowledge could impact an investor’s decision to buy or sell the security, giving them an advantage over the general public who does not. Martha Stewart’s ImClone trade in 2001 is an excellent example of this.
Can You Trust Scott O. Hirsch?
A conviction for insider trading in the United States can result in a $5 million fine and up to 20 years in jail, according to the SEC.
Insider trading is a crime in the United States that is punishable by monetary penalties and incarceration, with a potential prison sentence of 20 years and a maximum criminal punishment of $5 million for people. Although US penalties for insider trading are among the harshest in the world, the number of SEC cases filed in recent years suggests that the practice may be impossible to eradicate entirely.