Feds Charge ex-Home Diagnostics CEO with Insider Trading Violations With Acquisition From Nipro Diagnostics

Last year Home Diagnostics was sold to Nipro Corporation and the case here involves alleged information being given out before the transactions took place and of course there were those who benefited financially. The press release was from June of 2010 and you can read the archive here. The former CEO of Home Diagnostics is accused of tipping off a friend who allegedly bought 2000 shares and sold after the deal went public.

Back in August of 2008 Home Diagnostics received FDA approval for their glucose meter, and the company was one of the first to integrate with HealthVault for automated input of patient data. The company manufactures diabetic testing devices and strips for consumers.

The World's Smallest Glucose Meter approved by the FDA

This bring up another item that was in the news this weekend relative to data breaches at Nasdaq with potential insider information being leaded via software use with the claim of someone monitoring and having access to reading confidential material for over a year and there are healthcare companies using the same software. This case is not one where someone benefitted by millions but obviously the FBI has a trail they feel to file and attempt to prove the case. BD

Healthcare Industry Is Not Alone with Hackers, NASDAQ Has Intruders Using Algorithms to Break In-FBI Investigation

The former chairman, president and CEO of Home Diagnostics Inc. is facing insider trading charges from federal prosecutors and the Securities &Exchange Commission, accusing him of tipping off friends and family to Nipro Corp.'s (TYO:8086) $215 million acquisition of the diabetes monitoring equipment maker last year.

Federal prosecutors indicted George Holley, 70, last week, (the same day the SEC filed its complaint containing similar charges) accusing the Norwalk, Conn., resident of helping friends and family realize some $290,000 in illegal profits reaped from their insider trades of HDIX stock timed to capitalize on the buyout.

Holley is also accused of tipping off a friend and former neighbor who allegedly bought 2,000 shares before the merger and sold them for $10,450 in profits after the deal went public. He's also charged with tipping a former employee and longtime friend, who later allegedly realized about $26,700 from selling HDIX stock after the deal; a relative who allegedly reaped $66,100 from stock sales made after the acquisition was announced; and an employee of one of his companies who allegedly brought in $67,910.

Agents from the Federal Bureau of Investigation began questioning Holley's acquaintances about the trades in December 2010, according to the documents. He then allegedly sent analysts' reports dated before the merger to some of them, apparently seeking to provide some cover from the feds' probe.