SEC v. Arthur H. Reed and Allan F. Derusha, Case No. 1:12-cv-07119 (N.D. Ill.).  On September 6, 2012, the SEC filed settled insider trading charges against Arthur Reed, who was the Director of Contract Marketing for APP Pharmaceuticals, Inc., and his father-in-law Allan Derusha.  Reed learned that APP was in the process of being acquired by another company and bought APP stock based on his knowledge of the acquisition.  He tipped his father-in-law who also bought APP stock.  They sold their stock after APP’s acquisition was publicly announced, collectively realizing more than $425,000 in profits. 

The SEC charged Reed and Derusha with violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.  Reed consented, without admitting or denying the allegations, to the entry of a final judgment: (1) permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; (2) requiring him to pay disgorgement of $272,958 plus prejudgment interest of $38,714; and (3) requiring him to pay a civil penalty of only $94,182 based upon his financial condition.  Derusha consented, without admitting or denying the Commission’s allegations, to the entry of a final judgment: (1) permanently enjoining him from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (2) requiring him to pay disgorgement of $159,230 plus prejudgment interest of $19,578, and a $79,615 civil penalty.