The SEC has charged Georgia accountant Thomas D. Melvin, Jr. and seven others for allegedly profiting from nonpublic information Melvin collected from a client, who sits on the board of directors of Chattem Inc.Chattem Inc. is the maker of over-the-counter drug store products like Allegra, Gold Bond, and Icy Hot.
Four of the men charged have agreed to return $175,000 to the SEC.
According to the SEC’s complaint filed in federal court in Atlanta, the Chattem board member made clear to Melvin during their private conversations and meetings that the topic of discussion was confidential. The board member shared the likely increase in stock price ($20 to $25 per share) from the pending transaction as well as its potential timing. Nevertheless, Melvin illegally tipped three friends and a partner at his accounting firm Melvin, Rooks, and Howell PC.
The SEC alleges that the scheme gleaned its participants approximately $500,000.