SEC charges Connetics executive with insider trading

By Lisa Kerner

Erie, Pa., March 28 - The Securities and Exchange Commission filed suit in the U.S. District Court for the Southern District of New York against Alexander J. Yaroshinsky, a vice president at Connetics Corp., for illegally trading on the basis of non-public, inside information obtained from the Food and Drug Administration.

In a phone call to the FDA regarding Connetics' acne drug and related cancer study, Yaroshinsky learned the agency believed the drug was unsafe for use, according to a news release.

He then allegedly positioned himself to profit from a fall in the price of Connetics' stock by selling 15,100 of Connetics shares. In addition, Yaroshinsky bought 2,076 put contracts, giving him the right to sell Connetics shares at a fixed price and profit.

On June 13, 2005, the FDA's non-approval was made public. Connetics' share price fell 27% and Yaroshinsky profited by about $680,000, the release stated.

At the SEC's request, the honorable Michael B. Mukasey froze Yaroshinsky's assets, temporarily restraining him from further violations.

Yaroshinsky is charged with violations of the anti-fraud provisions of the Securities Exchange Act of 1934, Section 10(b) and rule 10-b5.

According to the release, the SEC is seeking a permanent injunction, disgorgement of all ill-gotten gains plus prejudgment interest, and civil money penalties.

Connetics is a Palo Alto, Calif.-based specialty pharmaceutical company that develops and commercializes dermatology products.

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