NEW YORK, May 26, 2008
NRI doctor Zachariah P Zachariah, director of cardiology at Fort
Lauderdale's Holy Cross Hospital was charged with using inside
information to trade stock illegally in deals that allegedly netted
$540,000 for the doctor, his brother and a friend. He was close
to the Bush family and an influential Indian American Republican
who has raised funds for the party.
The lawyer for Zachariah and his brother Mammen Zachariah, also
a cardiologist at Holy Cross, called the charges unfounded.
"We plan to fight them all the way," said the Zachariahs'
attorney, Jeffrey Gutchess of Hunton & Williams law firm in
Miami, according to South Florida Sun-Sentinel report
U.S. SECURITIES AND EXCHANGE COMMISSION
May 12, 2008
The Securities and Exchange Commission filed a civil action
today in the United States District Court for the Southern District
of Florida against Dr. Zachariah P. Zachariah (Zachariah), Dr.
Mammen P. Zachariah (M. Zachariah), and Dr. Sheldon Nassberg,
alleging that they engaged in illegal insider trading from which
they reaped a total of more than a half-million dollars in profits
from their illicit scheme. All three defendants reside and practice
medicine in the Ft. Lauderdale, Florida area.
The SEC's complaint concerns illegal trading in the shares of
two unrelated companies. In the first, the complaint alleges that
Zachariah breached his fiduciary duty to IVAX and its shareholders
only a few months after being appointed to serve as a company
director. IVAX's then-chairman and CEO called Zachariah and other
IVAX directors on July 6, 2005 after agreeing with the then-CEO
of Teva Pharmaceuticals Ltd. on preliminary terms for Teva to
acquire IVAX. Within minutes of that call, and even though IVAX
was in a "blackout" period during which the company
forbade officers and directors from trading in IVAX stock, Zachariah
placed the first of four separate IVAX stock purchase orders that
he made in his online brokerage account that day. Zachariah purchased
35,000 shares of IVAX stock at a cost of approximately $730,000.
The SEC further alleges that Zachariah later unlawfully tipped
his brother, M. Zachariah, who purchased 2,000 shares of IVAX
stock at a total cost of approximately $46,000 on the last trading
day before IVAX announced on July 25, 2005 that Teva would acquire
According to the SEC's complaint, Zachariah's IVAX stock purchases
were not the first time that he engaged in illegal trading while
in possession of non-public information. He also misappropriated
material, non-public information about Sarasota, Fla.-based Correctional
Services Corporation, which operated correctional and detention
The SEC's complaint alleges that from May through July 2005,
Zachariah bought over $200,000 worth of Correctional shares and
his brother and close friend, Nassberg, each made multiple purchases
of Correctional stock in the week leading up to a public announcement
on July 14, 2005, by The GEO Group, Inc., that it would acquire
Correctional. Zachariah, a GEO consultant, obtained material,
non-public information about a GEO-Correctional deal either from
his consulting relationship or from one or more of the GEO insiders
with whom he had a familial or other close, personal relationship.
Zachariah supplied the inside information to his brother and Nassberg,
who purchased approximately $162,000 worth and $32,000 worth of
Correctional stock, respectively.
The SEC alleges that the defendants violated Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The complaint seeks a judgment against all defendants providing
for injunctions, disgorgement of their ill-gotten gains with prejudgment
interest, and civil money penalties. The complaint also seeks
an order prohibiting Zachariah from serving as an officer or director
of a public company.
The Commission acknowledges the assistance of the Financial Industry
Regulatory Authority (FINRA) in this matter.