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Ex-Long Island Pharmaceutical Company CFO Admits To Insider Trading

The former chief financial officer of a Long Island pharmaceutical company is facing 20 years in prison after admitting to insider trading.

Aceto Corporation in Port Washington

Aceto Corporation in Port Washington

Photo Credit: Google Maps street view

East Northport resident Douglas Roth, the former CFO of Port Washington-based Aceto Corporation, which is based out of Port Washington, pleaded guilty this week to securities fraud for insider trading. Acting U.S. Attorney for the Eastern District of New York Seth DuCharme announced.

DuCharme said that Roth obtained material 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 and avoided more than $145,000 in losses.

While serving as the CFO at Aceto between May 2001 and March 2018, Roth received non-public information that Aceto’s financial performance had worsened substantially as compared to its most-recent publicly-released financial statements, DuCharme said.

The info also stated 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, according to DuCharme. 

While in possession of that non-public information, Roth sold nearly 70,000 shares of Aceto stock, said DuCharme. 

"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’s share price dropped significantly," said DuCharme.

By selling his shares before the press release was issued, Roth avoided more than $145,000 in losses. 

“Corporate officers cannot use their positions of trust for personal benefit at the expense of shareholders,” DuCharme said. “As demonstrated by today’s guilty plea, this Office will vigorously prosecute those who abuse their positions to defraud the financial markets.”

When he is sentenced, Roth, 63, faces up to 20 years in prison, forfeiture and fine up to $5 million.

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