A Medical Device Daily

The Securities and Exchange Commission reported that it obtained a final judgment against Harry Yim on April 23. Yim had consented to the judgment as part of a settlement of the insider trading charges the SEC had brought against him in October 2007.

Yim will be permanently enjoined from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. He also will disgorge his "ill-gotten" gains of $79,581, plus $6,124.84 in prejudgment interest, and pay a civil penalty equal to disgorgement of $79,581.

Yim agreed to the settlement without admitting or denying the allegations.

The commission's complaint alleged that Yim, of Vista, California, traded in Invitrogen (Carlsbad, California) stock immediately upon learning of non-public information about the company's poor financial results.

According to the complaint, Yim attended a company-wide, employee-only meeting on July 7, 2004. At the meeting, Invitrogen's CEO disclosed material non-public information regarding the company's negative financial performance. Immediately after the meeting, Yim attempted to sell his Invitrogen stock and continued his efforts until, on July 19, 2004, he sold all the shares of Invitrogen stock he could.

On July 21, 2004, Invitrogen reported its second-quarter earnings and lowered its revenue projections for the remainder of the company's fiscal year. After the earnings release, Invitrogen's stock price fell by more than 20%.

By selling his shares prior to the earnings release, Yim avoided losses of about $79,581 that he otherwise would have incurred from the decline in the company's stock price.

In other legalities: McKesson (San Francisco) has agreed to settle allegations that it violated federal reporting provisions relating to its handling of certain prescription medications regulated by the Drug Enforcement Administration (DEA).

Under the agreement between the company and six U.S. Attorney's offices, McKesson has agreed to pay $13.25 million in civil penalties for alleged violations of its obligations under the Controlled Substances Act.

McKesson, which operates 30 DEA-registered distribution facilities, failed to report to DEA suspicious sales of controlled substance pharmaceuticals it made to pharmacies that filled orders from illegal "Internet pharmacies" that sell drugs online to customers who do not have a legal prescription.

The company also failed to report suspicious orders of controlled substances that it received from other pharmacies and clinics even though the orders were unusually large. Every DEA registrant is required to report to DEA any suspicious orders or the theft or significant loss of controlled substances.

The U.S. attorneys allege that three McKesson distribution centers received and filled hundreds of suspicious orders placed by pharmacies participating in illicit Internet schemes, but failed to report the orders to DEA. They did so even after a Sept. 1, 2005, meeting at which DEA officials met with and warned McKesson officials about excessive sales of their products to pharmacies filling illegal online prescriptions.

The pharmacies filled purported online "prescriptions" for hydrocodone (contained in drugs such as Vicodin), but the prescriptions were issued outside the normal course of professional practice and not for a legitimate medical purpose.