U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20034 / March 8, 2007

SEC v. Shashikant C. Shah, Civil Action No. 2:07cv1075 (D.N.J.)

SEC Charges Shashikant Shah, Former Vice President of Now-Defunct Drug Manufacturer Able Laboratories, Inc., with Unlawful Insider Trading in Connection with Scheme to Conceal Quality Control Deficiencies

On March 8, 2007, the Securities and Exchange Commission (Commission) filed in the United States District Court for the District of New Jersey a settled civil injunctive action against Shashikant C. Shah (Shah) alleging that Shah, the Vice President of Quality Control, Quality Assurance and Regulatory Affairs of former drug maker Able Laboratories, Inc. (Able), engaged in unlawful insider trading by selling shares of Able's common stock during a 16-month period in which he possessed material, non-public information about Able's faulty quality control testing practices. Before halting operations in May 2005 due to such testing improprieties, Able developed, manufactured and sold at least 40 generic drugs including numerous antibiotic, analgesic and antipsychotic medications.

The Commission's complaint alleges that on eight separate occasions from August 2003 through December 2004, Shah acquired an aggregate of 58,000 shares of Able's common stock by exercising employee stock options, and in each case sold the securities either immediately thereafter or within a few days. According to the complaint, at the time he engaged in these transactions, Shah was aware that Able was concealing from the U.S. Food and Drug Administration (FDA) problems with the quality control testing of Able products that resulted in the public release of drugs failing to meet established quality control standards. Shah reaped $909,000 in ill-gotten gains as a result of his unlawful trading. In May 2005, Able's common stock price fell more than $18 per share, or 75%, in one trading day, after Able discovered faulty testing practices of the type Shah had known about, and the company suspended all product shipments. Able's stock price continued to fall in the ensuing months, and the company eventually declared bankruptcy in July 2005, selling substantially all of its assets five months later.

Without admitting or denying the allegations in the complaint, Shah consented to the entry of a final judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and prohibiting him from serving as an officer or director of any publicly traded company for a period of five years. Shah also agreed to pay disgorgement of his ill-gotten gains, prejudgment interest thereon and a civil penalty, in amounts to be determined by the court.

Also on March 8, 2007, in a related criminal action filed by the United States Attorney's Office for the District of New Jersey, Shah pleaded guilty to one count of conspiracy to commit securities fraud and to distribute misbranded and adulterated drugs. Three former supervisory chemists under Shah, Jose Concepcion, Ashish Macwan and Jyotin Parikh, also pleaded guilty to separate criminal informations charging each with one count of conspiracy to distribute misbranded and adulterated drug products. Shah and the three chemists each face a maximum of five years in federal prison and a $250,000 fine. The issue of restitution will be determined by the sentencing court.

The staff acknowledges the assistance and cooperation of the United States Attorney's Office for the District of New Jersey, the United States Postal Inspection Service and the FDA in the investigation of this matter.