• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

SEC Files, Settles Charges Against Five Former CryoLife Employees, Three Wives

Posted on: Friday, 16 September 2005, 21:00 CDT

Sep. 16--The Securities and Exchange Commission said Thursday it had filed and settled illegal insider trading charges against five former CryoLife employees and three of their wives related to a government recall of company products.

The Kennesaw-based company is a major supplier of surgical human transplant tissue.

On Aug. 14, 2002, the Food and Drug Administration ordered the company to halt shipments of some tissue because of contamination fears. According to the SEC, all the defendants -- most of them in sales -- knew in advance of the public that the FDA was about to put a nationwide hold on the shipments.

The SEC said the defendants sold their shares in the company at prices ranging from $9.20 to $9.41 before the recall problem became public.

When the FDA recall was announced by the company, its share price fell to $5.50 from $9.46, a drop of 42 percent. The next day, it fell even more, to $2.03 a share.

The SEC, in two separate actions filed in New York federal district court, said the defendants cumulatively avoided losses totaling $193,156.

Ashley Lee, executive vice president and chief financial officer of CryoLife, said Thursday the company had not received a copy of the SEC action. He also said the action does not involve the company itself.

Without admitting or denying the allegations, the six defendants in one case agreed to pay back $136,334, as well as interest of $19,583 and an unspecified penalty. They also agreed to be permanently enjoined from engaging in future violations.

They are Rodney R. Drinen of Phoenix; Gerald R. Holmes of Blue Springs, Mo., and his wife, Nancy; Thomas P. McHugh of Hollis, N.H.; and Prescott B. Nash of Englewood, Colo., and his wife, Christina.

In a separate action, James J. Farley, a former salesman, and his wife, Shelley, of Medford, N.J., also agreed, without admitting or denying the allegations, to a final judgment enjoining them from future violations. The SEC said it was seeking $56,832 for the losses they allegedly avoided, as well as interest and civil penalties.

-----

To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2005, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

CRY,

Source: The Atlanta Journal and Constitution

More News in this Category