SEC Charges Trio of Fort Lauderdale-Area Doctors With Insider Trading

FOR IMMEDIATE RELEASE
2008-84

Washington, D.C., May 12, 2008 — The Securities and Exchange Commission today charged three Fort Lauderdale-area medical doctors with illegal insider trading, alleging that they reaped a combined total of more than a half-million dollars in profits from their illicit scheme.

The SEC's complaint, filed in U.S. District Court for the Southern District of Florida, charges Dr. Zachariah P. Zachariah (Zachariah) and his brother Dr. Mammen P. Zachariah in regard to illegal trading in the shares of two unrelated companies. The SEC alleges that Zachariah, a board member at pharmaceutical company IVAX Corporation, began illegally trading in IVAX securities only minutes after he learned that IVAX might be acquired. Zachariah also tipped his brother, who then purchased IVAX shares.

The SEC's complaint further alleges that the two brothers and Zachariah's friend Dr. Sheldon Nassberg also engaged in illegal insider trading in the stock of an unrelated company, Correctional Services Corporation, around the same time as the illegal IVAX trading.

Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, said, "The use of inside information to trade ahead of mergers and acquisitions undermines investors' faith in the integrity of our public markets. This action demonstrates that we will continue to vigorously pursue actions against those who engage in such misconduct."

Glenn Stuart Gordon, Associate Regional Director of the SEC's Miami Regional Office, added, "Company shareholders are entitled to rely on directors not to abuse their access to inside information. As alleged in the Commission's complaint, not only did Zachariah violate his duty as an IVAX director, he did it right on the heels of a round of insider trading in the stock of another company where he had connections."

The SEC's complaint alleges that Zachariah breached his fiduciary duty to IVAX and its shareholders only a few months after being appointed to serve as a company director. IVAX's then-chairman and CEO called Zachariah and other IVAX directors on July 6, 2005, after agreeing with the then-CEO of Teva Pharmaceuticals Ltd. on preliminary terms for Teva to acquire IVAX. Within minutes of that call, even though IVAX was in a "blackout" period during which the company forbade officers and directors from trading in IVAX stock, Zachariah placed the first of four separate IVAX stock purchase orders in his online brokerage account that day. Zachariah purchased 35,000 shares of IVAX stock at a total cost of approximately $730,000.

The SEC further alleges that Zachariah later unlawfully tipped his brother, who purchased 2,000 shares of IVAX stock at a total cost of approximately $46,000 on the last trading day before IVAX announced on July 25, 2005, that Teva would acquire it.

According to the SEC's complaint, Zachariah's IVAX stock purchases were not the first time that he engaged in illegal trading while in possession of non-public information. He also misappropriated material, non-public information about Sarasota, Fla.-based Correctional Services Corporation, which operated correctional and detention facilities.

The SEC's complaint alleges that from May through July 2005, Zachariah bought over $200,000 worth of Correctional shares, and his brother and Nassberg each made multiple purchases of Correctional stock in the week leading up to a public announcement on July 14, 2005, by The GEO Group, Inc., that it would acquire Correctional. Zachariah, a GEO consultant, obtained material, non-public information about a GEO-Correctional deal either from his consulting relationship or from one or more of the GEO insiders with whom he had a familial or other close, personal relationship. Zachariah supplied the inside information to his brother and Nassberg, who purchased approximately $162,000 worth and $32,000 worth of Correctional stock, respectively.

The SEC alleges that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint seeks a judgment against all defendants providing for injunctions, disgorgement of their ill-gotten gains with prejudgment interest, and civil money penalties. The complaint also seeks an order prohibiting Zachariah from serving as an officer or director of a public company.

The Commission acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.

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For more information, contact:

Glenn S. Gordon
Associate Regional Director
SEC's Miami Regional Office
(305) 982-6360

Robert K. Levenson
Regional Trial Counsel
SEC's Miami Regional Office
(305) 982-6341

Christopher E. Martin
Senior Trial Counsel
SEC's Miami Regional Office
(305) 982-6386

http://www.sec.gov/news/press/2008/2008-84.htm