Lawyer Settles Insider Trading Charges
A former Trimedyne Inc. lawyer on Monday agreed to pay more than $67,000 to settle insider trading charges by the Securities and Exchange Commission.
Raymond G. Kolts was accused of trading on knowledge that the Food and Drug Administration would approve the Irvine company’s medical laser device in 1996. Kolts got the confidential information while representing a Trimedyne employee in a deposition, the SEC alleged in a lawsuit filed in a Los Angeles federal court.
Kolts, who neither admitted to nor denied the allegations, agreed to pay fines of $30,187 and to return $30,187 in alleged illegal trading profits, plus $6,644 in interest, the SEC said.
“It’s a matter of getting a situation over and done with,” said Paul DePasquale, Kolts’ lawyer. “It would have been very expensive to litigate the matter.”
Kolts was among four people charged in June by the SEC with insider trading in thousands of shares of Trimedyne, a maker of surgical lasers. Others cited by the agency were former company controller Michelle Nguyen and her brother and sister.
The SEC contended that the four people made a total of $113,000 in illegal profits before information about the FDA’s approval was made public.
Shane Traveller, president and chief financial officer for Trimedyne, couldn’t be reached for comment. Trimedyne had fired Nguyen after learning of her alleged activity, Traveller said last year.
The FDA announced on March 19, 1996, that Trimedyne could sell a side-firing laser device designed to treat enlarged prostates. The company’s shares almost tripled that day to $10.13 from $3.44.
Karen Matteson, senior trial counsel for the SEC in Los Angeles, said the case is significant because Kolts allegedly used information he got during the course of an attorney-client relationship for his own benefit.
“We haven’t brought many cases where this has occurred,” Matteson said.
The company’s stock closed Monday at $3.31, down 38 cents a share, on the Nasdaq market. The shares have moved up more than 91% so far this year.
