Crime & Safety
Ex-CFO At Port Washington Pharmaceutical Admits Insider Trading
Prosecutors say he sold nearly 70,000 shares of company stock just before the company publicly announced its worsening financial position.
PORT WASHINGTON, NY — A former executive at a Port Washington-based pharmaceutical company pleaded guilty to federal securities fraud charges after authorities said he used insider trading knowledge to offload shares ahead of a damaging public announcement, avoiding about $145,000 in losses.
Douglas Roth, former chief financial officer at Aceto Corp. on Tri Harbor Court, pleaded guilty Monday in Central Islip federal court. He faces up to two decades in prison, as well as forfeiture and a fine of up to $5 million.
Aceto marketed and sold generic pharmaceuticals, pharmaceutical ingredients and chemicals. Roth, 63, of East Northport, obtained material non-public information about Aceto’s financial condition while serving as the company’s chief financial executive, prosecutors said. He then sold company shares ahead of a public announcement detailing negative information about the company’s finances, authorities said.
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Roth worked as CFO of Aceto for about 17 years beginning in May 2001. Between January and March 2018, he learned private information that the company's financial performance substantially worsened compared to its latest publicly-released financial statements. That includes learning that Aceto likely breached certain financial agreements with bank lenders, and that the company could need to write down more than $100 million in goodwill assets, authorities said. Roth sold off nearly 70,000 shares of company stock shortly before the company publicly announced the news. Aceto's share price significantly dropped following the announcement.
"Corporate officers cannot use their positions of trust for personal benefit at the expense of shareholders," Seth DuCharme, acting U.S. Attorney for the Eastern District of New York, said in a news release. "As demonstrated by today’s guilty plea, this Office will vigorously prosecute those who abuse their positions to defraud the financial markets."
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Patch has reached out to Aceto for comment and will update when we hear back.
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