By Jonathan Stempel
NEW YORK, Jan 13 (Reuters) - Federal prosecutors charged a Connecticut man over his alleged participation in an insider trading scheme tied to the takeover of his company, a maker of diabetes testing products, by Japan's Nipro Corp.
George Holley, founder and former chief executive of Home Diagnostics Inc, and Phairot Iamnaita, a Thailand resident and business partner of Holley's, were each charged with one count of conspiracy to commit insider trading.
If convicted, each defendant could face up to five years in prison plus a fine, according to U.S. Attorney Paul Fishman in New Jersey, who announced the charges on Thursday.
Nipro agreed on Feb. 3, 2010 to buy Home Diagnostics for $215 million, or $11.50 per share, at a big premium to the latter's closing price the previous day. The news sent Home Diagnostics shares up 89 percent.
Prosecutors said Holley, 70, tipped Iamnaita, 28, and at least three others prior to the announcement that a sale of Fort Lauderdale, Florida-based Home Diagnostics was possible.
They said Iamnaita and others then bought more than 58,000 shares, resulting in more than $290,000 of illegal profits.
The U.S. Securities and Exchange Commission filed a related civil case against Holley, Iamnaita and Steven Dudas, who the regulator said is Holley's accountant.
Lawyers for Holley and Iamnaita said their clients pleaded not guilty at a hearing in Newark, New Jersey federal court.
Bail was set at $1 million to $3 million for Holley, depending on whether he travels to Thailand, his lawyer Kevin Marino said.
'Mr. Holley looks forward to proceeding to trial, and expects to be exonerated,' Marino said.
Holley is posting property to secure Iamnaita's appearance, according to Michael Critchley, a lawyer for Iamnaita.
'My client is innocent,' Critchley said. 'The charges are an overreach.'
A spokeswoman for Fishman did not immediately return a call after the hearing seeking comment. William Deni, a lawyer for Dudas, declined to comment, his office said.
Holley lives in Norwalk, Connecticut, and Iamnaita in Hangdong, Chiang Mai, prosecutors said.
Dudas lives in Pittstown, New Jersey, the SEC said.
The criminal case is U.S. v. Holley et al, U.S. District Court, District of New Jersey, No. 11-04013. The SEC case is SEC v. Holley et al in the same court.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang, Bernard Orr) Keywords: HOMEDIAGNOSTICS/INSIDERTRADING (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Jan 13 (Reuters) - Federal prosecutors charged a Connecticut man over his alleged participation in an insider trading scheme tied to the takeover of his company, a maker of diabetes testing products, by Japan's Nipro Corp.
George Holley, founder and former chief executive of Home Diagnostics Inc, and Phairot Iamnaita, a Thailand resident and business partner of Holley's, were each charged with one count of conspiracy to commit insider trading.
If convicted, each defendant could face up to five years in prison plus a fine, according to U.S. Attorney Paul Fishman in New Jersey, who announced the charges on Thursday.
Nipro agreed on Feb. 3, 2010 to buy Home Diagnostics for $215 million, or $11.50 per share, at a big premium to the latter's closing price the previous day. The news sent Home Diagnostics shares up 89 percent.
Prosecutors said Holley, 70, tipped Iamnaita, 28, and at least three others prior to the announcement that a sale of Fort Lauderdale, Florida-based Home Diagnostics was possible.
They said Iamnaita and others then bought more than 58,000 shares, resulting in more than $290,000 of illegal profits.
The U.S. Securities and Exchange Commission filed a related civil case against Holley, Iamnaita and Steven Dudas, who the regulator said is Holley's accountant.
Lawyers for Holley and Iamnaita said their clients pleaded not guilty at a hearing in Newark, New Jersey federal court.
Bail was set at $1 million to $3 million for Holley, depending on whether he travels to Thailand, his lawyer Kevin Marino said.
'Mr. Holley looks forward to proceeding to trial, and expects to be exonerated,' Marino said.
Holley is posting property to secure Iamnaita's appearance, according to Michael Critchley, a lawyer for Iamnaita.
'My client is innocent,' Critchley said. 'The charges are an overreach.'
A spokeswoman for Fishman did not immediately return a call after the hearing seeking comment. William Deni, a lawyer for Dudas, declined to comment, his office said.
Holley lives in Norwalk, Connecticut, and Iamnaita in Hangdong, Chiang Mai, prosecutors said.
Dudas lives in Pittstown, New Jersey, the SEC said.
The criminal case is U.S. v. Holley et al, U.S. District Court, District of New Jersey, No. 11-04013. The SEC case is SEC v. Holley et al in the same court.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang, Bernard Orr) Keywords: HOMEDIAGNOSTICS/INSIDERTRADING (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.