MINNEAPOLIS - Three men have been indicted for their roles in an insider trading conspiracy involving a medical device company’s nonpublic business acquisition deal.
According to court documents, beginning in January 2018 through at least August 2020, Doron “Ron" Tavlin, 66, of Minneapolis, Afshin “Alex" Farahan, 55, of Los Angeles, and David Gantman, 56, of Mendota Heights, willfully engaged in an insider trading conspiracy. The conspiracy involved nonpublic information about the acquisition of Company B, an Israeli-based company that specialized in robotics for spinal procedures, by Company A, an Ireland-based medical device company that primarily operated from its executive headquarters in Minneapolis. Tavlin, a former vice president of Company B, learned material, nonpublic information about Company A’s potential acquisition of Company B. In violation of his duty to the company, Tavlin tipped this information about the acquisition to his friend, Farahan, who then tipped the information to Gantman. The defendants knew that Company A’s imminent acquisition of Company B would likely result in an increase in Company B’s stock price. Farahan and Gantman used the nonpublic information to purchase quickly substantial amounts of Company B securities throughout August and September 2018. On Sept. 21, 2018, the day after Company B publicly announced its acquisition by Company A, Farahan and Gantman each sold all of their Company B securities for a total profit of more than $500,000.
According to court documents, in October 2018, Tavlin learned that the Financial Industry Regulatory Authority (FINRA) was investigating certain trades of Company B securities that occurred prior to the publicly announced acquisition. As part of its inquiry, FINRA asked insiders who knew about the secret acquisition negotiations, which included Tavlin, whether they knew any of the parties who traded in Company B securities leading up to the public announcement. In January 2019, Tavlin responded to FINRA’s inquiry by falsely denying that he recognized any names on a list of persons and entities that purchased Company B securities, which included Farahan and Gantman’s names.
According to court documents, it was part of the insider trading conspiracy that Tavlin and Farahan agreed that Farahan would pay money to Tavlin in exchange for the material, nonpublic information that Tavlin provided to Farahan. For example, in October 2019, Farahan gave Tavlin a $25,000 check in exchange for the information that Tavlin had provided about Company B leading up to the acquisition.
The defendants are charged with conspiracy to engage in insider trading, securities fraud in the form of insider trading, and aiding and abetting securities fraud. Tavlin and Gantman made their initial appearances yesterday in U.S. District Court before Magistrate Judge Tony N. Leung. Farahan will make his initial appearance at a later date.
This case is the result of an investigation conducted by the FBI.
Assistant U.S. Attorneys Matthew S. Ebert and Kimberly A. Svendsen are prosecuting the case.
An indictment is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Source: USAO - Minnesota
