A former top official with a Long Island drug company copped Monday to trading on inside information to avoid losing $145,000 on the firm’s stock, federal prosecutors said.
Douglas Roth, the 63-year-old former chief financial officer at Aceto Corp., pleaded guilty in federal court in Central Islip to securities fraud and faces up to 20 years in prison and a $5 million fine.
“Corporate officers cannot use their positions of trust for personal benefit at the expense of shareholders,” stated Acting United States Attorney Seth D. DuCharme.
Prosecutors said Roth was Aceto CFO for 17 years until 2018, the year he learned the company’s financial performance was worse than it had publicly said and might have to break bank loan agreements.
He also learned that the company might have to write off $100 million in assets. He then sold more than 65,000 shares of stock valued at about $7 a share - right before Aceto disclosed the bad news publicly.
The stock price then dropped from $7 a share to about $3.20 a share, enabling Roth to avoid the $145,000 loss, officials said.
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