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SEC sues on insider trading
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March 12, 1998: 3:35 p.m. ET
Agency alleges group made more than $200,000 on privileged information
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NEW YORK (CNNfn) - The U.S. Securities and Exchange Commission has charged a current director of Synetic Inc. and eight others with insider trading that netted the group a profit of more than $200,000 between 1993 and 1994.
In a suit filed in a U.S. District Court in Los Angeles, the SEC alleges that Roger Licht, who also was a director of the company's former parent, Medco Containment Services Inc., engaged in insider trading.
The SEC claims that Licht, along with Steven Weston, who was the president of Leisure Concepts Inc. during that period, exchanged non-public information and used that information to gain an advantage in investing in the stock market.
Specifically, the SEC says in 1993 Licht told Weston, along with the others named in the suit, that Synetic parent Medco was in talks to be acquired by pharmaceuticals firm Merck & Co. (MRK), a deal that was consummated in July of that year.
The group began to buy Synetic stock, eventually realizing profits of $122,623. After that, some of the members participated in devising an elaborate cover-up to deceive the SEC, the agency said.
In addition, the SEC alleged that Licht in 1994 tipped of some of the defendants about an upcoming Synetic stock buyback program, which netted the group $69,408.
For his part, Weston in 1993 tipped off Licht that Leisure Concepts was to announce a favorable earnings report, leading Licht and others in the group to buy up Leisure Concepts shares, netting $23,431.
Synetic Chairman Martin Wygood stood up for his board member. "Mr. Licht has always exhibited the greatest integrity in his dealings with Synetic. We expect that after all the facts are aired, Licht will be fully exonerated."
Wygood said his company had fully cooperated with the SEC's investigation and that Synetic is not alleged to have been part of any wrongdoing.
The SEC seeks to have the defendants give up all the money they made from the alleged illegal trades, including interest. It also wants a court order barring Licht from ever serving as an officer or director of a public company.
The Elmwood, N.J.-based Synetic (SNTC) produces a wide variety of plastics and also has a health care communications subsidiary, Avicienna, which seeks to develop the Internet as a way to deliver medical services.
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