A Medical Device Daily

The U.S. Securities and Exchange Commission has filed a civil action in the U.S. District Court for the Eastern District of Pennsylvania against Stanley Manne, of Aventura, Florida, for unlawful insider trading in the securities of Valley Forge Scientific, a manufacturer of microsurgical instruments which was located in Oaks, Pennsylvania, and is now known as Synergetics.

The complaint alleges that Manne, a retired business owner, purchased securities of Valley Forge securities using non-public insider information concerning a merger between Valley Forge and Synergetics (St. Charles, Missouri) (Medical Device Daily, Sept. 25, 2005). Without admitting or denying the allegations of the complaint, Manne will be required to disgorge $85,601, plus pre-judgment interest of $13,315, and a civil penalty of $85,601.

Valley Forge’s common stock was traded on the Boston Stock Exchange and quoted on the Nasdaq SmallCap Market until the completion of the merger with Synergetics. On May 3, 2005, the companies reported the merger, and Valley Forge common stock closed at $2.30 a share that day, an increase of 23% over the previous day.

The complaint alleges that Valley Forge and Synergetics began discussions concerning a merger in July 2003, and in May 2004, a Valley Forge director who later became Valley Forge’s COO, became the principal negotiator for Valley Forge in connection with the merger.

Manne and the COO had a personal and professional relationship for more than 30 years, and Manne knew that the COO was a Valley Forge director and that he had access to confidential information.

In February 2005, the COO resigned from the Valley Forge board to become the company’s COO and asked Manne if he would be interested in replacing him on Valley Forge’s board. He told Manne that Valley Forge was discussing a potential sale or merger, including with Synergetics, and that, as a director, Manne would be involved in these matters.

Manne agreed to keep this information confidential and not to trade on it. But between Feb. 14, 2005 and May 3, 2005, Manne purchased 105,680 shares of Valley Forge common stock in 45 trades on 34 separate days. Although Manne did not sell his shares immediately after the merger report, as a result of his unlawful trading he realized potential profits of $85,601.