Litigation Release No. 20203 / July 24, 2007
SEC v. Shane Bashir Suman and Monie Rahman, No.
07-CV 6625 (J. Pauley) (S.D.N.Y.)
SEC Charges Couple With Illegal Insider Trading in
Securities of Molecular Devices Corp.
Washington, D.C., July 24, 2007 - The Securities
and Exchange Commission today filed insider trading charges
against a former MDS Inc. employee who allegedly stole
confidential information about MDS's impending tender offer
for the shares of Molecular Devices Corp. (Molecular) and,
along with his wife, used that information to trade in
Molecular securities ahead of the merger's public
announcement. The Ontario Securities Commission also brought
its own separate enforcement action today to address this
conduct.
The SEC alleges that Shane Bashir Suman, 34, of Toronto,
learned about secret merger negotiations through access he
had to electronic data in his job as an information
technology specialist at MDS, then gave that information to
his wife, Monie Rahman, 36. In the days before the tender
offer became publicly known, Suman and Rahman made just over
$1 million by trading in the securities of Molecular.
The SEC's complaint, filed in the United States District
Court for the Southern District of New York, alleges that
Suman's job gave him access to a vast amount of secret
corporate information. In particular, Suman was able to read
the contents of confidential e-mails and other electronic
data without detection. For example, the circumstances in
which Suman was called to restore an electronic document on
Jan. 23, 2007, the day before he and his wife started
trading, suggested the code name for the MDS-Molecular
merger and the sensitivity associated with that project.
Later that day, Suman conducted Internet searches for both
that code name and for "Molecular Devices". Just after
running those searches, Suman called Rahman and spoke to her
for 100 minutes, much longer than their phone records
indicate they usually spoke.
Between Jan. 24 and Jan. 26, 2007, Suman and Rahman
bought 12,000 Molecular shares and 900 Molecular call
options. Brokerage account records indicate that a portion
of the Molecular securities purchases were financed with a
margin loan of approximately $200,000, and the couple
previously did not have a position in Molecular securities.
On Jan. 29, 2007, MDS and Molecular jointly announced the
tender offer for Molecular's shares. The stock price
immediately rose from almost $24 to roughly $35, making
Rahman and Suman's trades worth more than $1 million.
Suman and Rahman are both Canadian citizens, though
Rahman has lived in Logan, Utah, since June 2006. The
Commission acknowledges the assistance of the OSC and the
Chicago Board Options Exchange in this matter.
