Douglas Roth, the former chief financial officer of Aceto Corporation, pleaded guilty to securities fraud for insider trading.
Roth obtained non-public information about Aceto’s financial condition while serving as the
company’s CFO, then sold shares of Aceto ahead of a public announcement detailing negative
information about the company’s finances, avoiding more than $145,000 in losses.
Aceto is a pharmaceutical company based in Port Washington.
When sentenced, Roth faces up to 20 years in prison, as well as forfeiture and a fine of up to $5 million.
Seth D. DuCharme, acting United States attorney for the Eastern District of New York, and William F. Sweeney, Jr., assistant director-in-charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.
According to court filings and facts presented during the plea proceeding, Roth was CFO of Aceto from approximately May 2001 to March 31, 2018. Between January and March 2018, Roth was aware that Aceto’s financial performance had worsened substantially as compared to its most-recent publicly-released financial statements, including that Aceto was likely to breach certain financial covenants it
owed to its bank lenders, and that Aceto might need to write down more than $100 million in
goodwill assets.
While in possession of that information, Roth sold approximately 69,549 shares of Aceto stock. Shortly thereafter, Aceto issued a press release publicly announcing that its financial condition had worsened, that it had breached certain financial covenants and that it would need to write down significant goodwill assets, after which Aceto’sshare price dropped significantly. By selling his shares before the press release was issued, Roth
avoided more than $145,000 in losses.