A Medical Device Daily
The Securities and Exchange Commission (SEC) charged Richardson, Texas resident Reza Saleh with insider trading around the public announcement of Dell's tender offer for Perot Systems (Plano, Texas).
The SEC alleges that Saleh made increasingly large purchases of Perot Systems call options contracts based on material, non-public information that he learned in the course of his employment with, or duties for, two Perot-related private companies and Perot Systems. Immediately following the tender offer announcement on Monday, Sept. 21, Saleh sold all of the call option contracts in the accounts and reaped about $8.6 million in illicit profits.
Later that same morning, SEC staff with assistance from the Options Regulatory Surveillance Authority identified Saleh as a suspicious trader. Soon after being contacted by SEC staff, Saleh acknowledged to a Perot Systems director that he knew about the impending transaction when he traded.
"The overwhelming evidence in this case allowed the SEC to move quickly against the trader before he could spend the huge profits from his illegal trading," said Rose Romero, director of the SEC's Fort Worth Regional Office. "The commission is seeking a court order to freeze Saleh's assets."
According to the SEC's complaint, filed in federal court in Dallas, Saleh purchased 9,332 Perot Systems call option contracts through two brokerage accounts between Sept. 4 and Sept. 18, 2009. The call option contracts were set to expire in October 2009 and January 2010. Saleh sold all of the call options following the announcement as Perot Systems' stock price immediately increased by about 65%.
In other legal news, Suresh Chand pleaded guilty in U.S. District Court in Detroit to participating in multiple conspiracies to defraud the Medicare program and to launder the proceeds of the fraud.
Chand pleaded guilty before U.S. District Judge Sean Cox to one count of conspiracy to commit health care fraud and one count of conspiracy to launder money. At his sentencing, which is scheduled for Jan. 13, 2010, Chand faces a statutory maximum of 30 years in prison and a $750,000 fine.
Chand admitted that in 2003 he owned and controlled a company called Continental Rehab Services (CRS; Warren, Michigan), which purported to provide physical and occupational therapy services to Medicare patients. Chand also admitted that in 2004 he incorporated another physical and occupational therapy services company at the same Warren, Michigan, address called Pacific Management Services (PMS). That company also purported to provide such services to Medicare patients.
Chand acknowledged in his guilty plea that he and his associates at CRS and PMS created false physical and occupational therapy files for Medicare patients when the purported services had not in fact been provided. The false services reflected in the files were billed to Medicare through sham Medicare providers controlled by Chand and others. These sham Medicare providers included multiple Detroit companies including Tri-Star Rehab Services, Manage Care Physical Therapy & Rehab Services, and S.U.B. Rehabilitation and Physical Therapy Center.