SEC accuses three of insider trading for 2018 Medtronic acquisition – Twin Cities
The Securities and Exchange Commission is suing a Minneapolis business executive and two friends for insider trading related to Medtronic’s 2018 acquisition of an Israeli robotics firm.
Doron Tavlin, 67, was vice president of business development for Mazor Robotics when he was involved in discussions about the company’s potential acquisition by Medtronic, according to a complaint filed Wednesday in U.S. District Court in Minnesota.
In August 2018, Tavlin was at his Minneapolis home hosting a friend from California, 55-year-old Afshir Farahan, when Tavlin told Farahan about the potential acquisition, the complaint alleges.
“Tavlin tipped Farahan that Mazor was about to be acquired, that Farahan should purchase shares quickly, and that the information was confidential. Tavlin told Farahan he could be fired for providing Farahan with this information. Tavlin also asked Farahan to invest in Mazor on Tavlin’s behalf,” the SEC alleges.
During the same trip, Farahan was at his luxury rug store in Bloomington discussing stocks with a mutual friend, David Gantman, a 56-year-old insurance agent and benefits consultant from Mendota Heights, when Farahan disclosed the information he got from Tavlin, the complaint alleges.
Over the next four weeks, Farahan purchased a total of $1.031 million in Mazor stock between his personal and business accounts.
Meanwhile, Gantman bought $214,000 in Mazor stock plus $73,000 in call options, a risky form of investment with the potential to generate much higher returns if the share price were to go up.
In September 2018, the day after Farahan’s last purchase, Mazor announced it would be sold to Medtronic, and the company’s stock price jumped more than 10 percent.
The next day, Farahan sold all of his Mazor shares at a profit of $247,500, and Gantman made $255,600 selling all of his Mazor securities.
DENIAL, KICKBACK ALLEGATION
The following month, the Financial Industry Regulatory Authority contacted Mazor as part of an investigation into trades made in advance of the company’s sale announcement.
Tavlin was shown a list of traders that included both Farahan and Gantman and denied he knew anyone on it; that same day, Tavlin spoke with Farahan by phone and sent him the trader list, which Farahan then used to notify Gantham, the SEC alleges.
A year later, the SEC says, Farahan handed Tavlin a $25,000 check during a breakfast in Minnesota as a kickback for the investment tip.
Gantman also denied to FINRA investigators that he knew Tavlin, although Gantman in a December 2017 email described Tavlin to another person as a friend, according to the complaint.
The SEC has asked a judge to force the three men to forfeit the money they made on the stock purchases, plus interest and penalties.
The court file does not list any attorneys for the defendants.